Preamble

Preamble

Oral Answers to Questions — TRADE

Shipping Industry

Oral Answers to Questions — TRADE

Multi-Fibre Arrangement

Chile (ECGD Cover)

Overseas Trade (TUC and CBI Co-operation)

Motor Vehicles and Vehicle Equipment (Exports)

Steel (Dumping)

Paper and Board (Duty-free Quotas)

European Community (Coastguard Service)

European Community (Council of Trade Ministers)

British Airports Authority

Current Account Surplus

Third London Airport

China

Tourism Development Areas

Her Majesty's Coastguard

Motor Vehicles (Imports)

Patent Applications

UNCTAD V (Common Fund)

Ships (Registration)

Exports

Oral Answers to Questions — LAMBETH PALACE

QUESTIONS TO MINISTERS

NORTHERN IRELAND (PRISONERS)

OCEAN ISLAND (SECURITY)

EUROPEAN COMMUNITIES (DRAFT ORDER)

" WEEKEND WORLD"TELEVISION PROGRAMME

STATUTORY INSTRUMENTS, &c.

BUSINESS OF THE HOUSE

LOCAL GOVERNMENT GRANTS (ETHNIC GROUPS) [MONEY]

LOCAL GOVERNMENT FINANCE BILL

LOCAL GOVERNMENT FINANCE [MONEY]

RETIREMENT PENSIONS

Preamble

The House met at half-past Two o'clock

Preamble

PRAYERS

[Mr. SPEAKER in the Chair]

Oral Answers to Questions — TRADE

Shipping Industry

Mr. Michael Spicer: asked the Secretary of State for Trade when he plans next to meet representatives of the shipping industry.

The Secretary of State for Trade (Mr. John Smith): There are frequent contacts at both ministerial and official level with the General Council of British Shipping which represents the United Kingdom shipping industry. I next plan to meet the Council on 4 April.

Mr. Spicer: When the Minister next meets the Council, bearing in mind the military and commercial threat posed by the heavily subsidised Soviet shipping

fleet, will he tell it what plans he intends to put in hand to effect better competition between British ships and Russian ships and, particularly, whether he is considering a quota or surcharge arrangement similar to that in the United States?

Mr. Smith: The hon. Gentleman may be aware that my hon. Friend the Under-Secretary of State has raised this matter frequently in the context of the European Community. Partly as a result of his efforts, the Transport Council recently took a decision to monitor all liner carriers on certain trade routes serving the EEC.

Mr. Alan Lee Williams: When my right hon. Friend meets the Council will he raise the question of the cost of pilotage in the Port of London, which seems to be a great deal higher than elsewhere? Will he also consider asking the Council whether it could put proposals to the Port of London Authority to rationalise the whole question of pilotage on the River Thames?

Mr. Smith: That matter is under consideration in the context of the Merchant Shipping Bill which is in Committee. I shall bear in mind what my hon. Friend has said.

Mr. Adley: Will the Secretary of State find out from the General Council of British Shipping what its policy is regarding fines which are levied on master mariners who break the anti-pollution regulations? Will he see if he can obtain


from it some general agreement about its policy and then come to the House and make a statement?

Mr. Smith: The whole question has been discussed between the Council and my hon. Friend the Under-Secretary of State and the Department. I understand that it will be debated in the Merchant Shipping Bill Committee, perhaps tomorrow. I shall read with great interest the contributions hon. Gentlemen make on the subject.

Mr. Litterick: Does the Secretary of State know the current relationship between the charges levied by the shipping cartel and the actual costs of operating the ships? If he does not know, will he undertake to report this to the House as soon as possible?

Mr. Smith: My hon. Friend is inviting me to launch myself into a complicated area between the shipping interests and the shipper interests. The question will have to be more finely defined before I can give a helpful answer.

Oral Answers to Questions — TRADE

Multi-Fibre Arrangement

Mr. Arnold: asked the Secretary of State for Trade what representations he has received about the workings of the multi-fibre arrangement.

Mr. John Smith: I keep closely in touch with both sides of the textiles and clothing industry about the workings of the multi-fibre arrangement and related issues.

Mr. Arnold: Is the Secretary of State aware that the success of the MFA will have to be judged against the outcome of the Tokyo round? Does he really believe that the present proposals of the Commission, which will result in textile tariffs in the Unted States being at least 35 per cent. higher than those in the EEC, can possibly be justified?

Mr. Smith: The multi-fibre arrangement is working well and will maintain itself in operation until 1982. I hope that it will be continued beyond that, because I think that it is necessary for the industry. I have only recently received the latest interim reports from the Commission on the multilateral trade negotiations.

Since there are over 2,000 items in the United States tariff scale alone, I am having it carefully evaluated. I do not wish to express an opinion on the worth to the Community, as opposed to the United States, of these offers until I have had a fuller opportunity to analyse them properly.

Mr. Madden: Has the Secretary of State any further news about action being take to control textile exports from Mediterranean associates such as Portugal, Turkey and Malta especially in the context of outward processing? Can he say whether, when the time comes to negotiate the agreement, efforts will be made to include China?

Mr. Smith: In answer to the first part of my hon. Friend's question, agreements were reached with the Mediterranean countries for different periods of time but on a basis which I think was satisfactory, particularly since much better safeguard mechanisms have been introduced into them. Discussions between the EEC and China have begun. Obviously in these negotiations the British Government will not only have regard to our commercial interests, but will wish to ensure that the outcome is consistent with the multi-fibre arrangement.

Mr. Fletcher-Cooke: Does the Secretary of State accept, either wholly or in part, the complaint made by Hong Kong that although its quota has been reduced for imports into this country, ostensibly in the interests of the home producers, the shortfall has been made up, not by the home producers, but by importers from other countries?

Mr. Smith: It is always difficult to pin down these matters completely. Our judgment is that part of the gap created by the reduction of imports from Hong Kong has been made up by the home producers. The quotas bit quite heavily on Hong Kong, as they did on some other countries. I am afraid that that was an unfortunate necessity in the achievement of the multi-fibre arrangement.

Mr. James Lamond: Has my right hon. Friend had any representations from the British Textile Confederation about the Tokyo round? Is he aware that the BTC regards the current offer by the United States as being unfavourable to the textile industry? Will my right hon.


Friend bear that in mind when he is considering this matter?

Mr. Smith: I have received recent representations from the British Textile Confederation. I value the opportunity of corresponding with that organisation and discussing these matters with its members. The American offer is under discussion in the Commission. Recent discussions have taken place and I am in the process of evaluating them in the context of textiles policy and of the MFA negotiations.

Mr. Michael Latham: Has the Department of Trade seen the annual report from the Leicester and District Hosiery Manufacturers Association which I sent to the Under-Secretary and which is critical of the operation of the multi-fibre arrangement? What steps are the Department taking to improve monitoring the effectiveness of that arrangement?

Mr. Smith: I have not seen the report, although I understand that it has been sent to my hon. Friend the Under-Secretary. My impression—and indeed it is more than an impression, it is a justified conclusion—is that the monitoring of the multi-fibre arrangement is working reasonably satisfactorily. But if detailed points are brought to my attention which I feel are justified I shall not hesitate to raise them with the Commission.

Mr. Nott: What is the legal position of the quotas? Is the Secretary of State aware that many textile companies in the country foresaw that when the multi-fibre-arrangement was renegotiated the total quotas would be more or less fixed until the end of the period but now, with enlargement and the Chinese question, they see the quotas as being movable? Is there no fixed limit on the quota? There is some uncertainty about this problem.

Mr. Smith: My understanding is that there are fixed quotas under the bilateral arrangement. Of course, the Mediterranean associates are in a different position because they are regarded as preferential countries in relation to the Community. If any other countries were to be brought within the scope of the multi-fibre arrangement, that would raise the question of whether there should be an increase in the global amounts.

Chile (ECGD Cover)

Mr. Whitney: asked the Secretary of State for Trade when he expects to restore medium-term Export Credit Guarantee Department cover for Chile, in view of the fact that only £25 million outstanding debt to the United Kingdom remains unpaid.

Mrs. Knight: asked the Secretary of State for Trade if he will make a statement on the restoration of the Export Credit Guarantee Department medium-term cover for exports to Chile.

Mr. John Smith: Some £20 million of the £50 million claims paid by ECGD in respect of defaults by successive Chilean Governments is still to be recovered. This is not an inconsiderable sum and I am not prepared to authorise the resumption of ECGD cover for new medium-term credits.

Mr. Whitney: Is the Secretary of State aware that that reply will cause grave disappointment to British industry? Does he agree that £20 million is an insignificant sum in relation to Chile's foreign trade? As the Secretary of State knows, the delay in the overpayment is because of technical arrangements related to the"Club of Paris ". Does he agree that the expansion of the Chilean economy as a result of following policies which the Secretary of State may not find congenial to his own ideas has resulted in an increase in the industrial market? This is available to industrialised countries in the West but it is being absorbed by our economic competitors and denied to our industrialists because of the Secretary of State's policy.

Mr. Smith: There may well have been an improvement in the external side of the Chilean economy in the last year or so. None the less, the House should remember that serious problems remain, including the high rate of inflation, unemployment, the external debt service and the possibility of an international trade union boycott. In those circumstances, there is need for some caution, given the commercial nature of ECGD's operations.

Mrs. Knight: Is the Secretary of State aware that many Birmingham firms are being prevented from doing any trade with Chile because of the intransigence of


the ECGD? Is a political decision involved? If it is, is the Secretary of State aware that America and Russia make these credit facilities available?
Is the Secretary of State aware that Chile increased its gross national product by 6 per cent. in the last three years and that there was a 12 per cent. increase in purchasing power in the same period? Does he agree that those factors make for a more important market and that we should get into it?

Mr. Smith: I gave the reasons for my decision in an earlier answer. The hon. Lady may have made a mistake. So far as I am aware the Soviet Union does not give cover, but I shall inquire into that. I remind the hon. Lady that ECGD cover is not withdrawn for business in terms not exceeding six months' credit. That cover is freely available. Some countries give cover and some do not. Amongst those which do not give medium-term cover are Belgium, Denmark and the Netherlands.

Mr. Grocott: I understand the Opposition's desire not to allow morality to intrude into the money-making process, but does my right hon. Friend agree that all who love freedom and democracy hope that the present regime in Chile is temporary? Does he agree that it would be unwise for anyone to make a substantial investment in Chile?

Mr. Smith: My hon. Friend has broadened the question. I shall confine myself to the original question.

Mr. Nott: When I was a junior Minister at the Treasury I received formal representations from the then Labour Opposition that we should engage in trade with Chile on an entirely non-political basis, in view of the longstanding friendship between the Chilean and the British people. That was the position of the official Labour Opposition when we were in Government. What has changed, apart from the regime, to alter that attitude?

Mr. Smith: My hon. Friends might think that the fact stated in the latter part of the hon. Gentleman's question justifies their change of attitude.

Overseas Trade (TUC and CBI Co-operation)

Mr. Kenneth Lewis: asked the Secretary of State for Trade what discussions he has had with the Trades Union Congress to secure agreement on co-operation between it and the Confederation of British Industry with a view to increasing Great Britain's overseas trade.

Mr. John Smith: The TUC and CBI already co-operate in the promotion of exports through their membership of the British Overseas Trade Board and the National Economic Development Council, which is very much concerned with the achievement of higher exports and import substitution.

Mr. Lewis: Is the Secretary of State aware of the general feeling that in the next 12 months we shall experience a more difficult time in overseas trade, that our prices will rise, and that we shall be less competitive? Should not the TUC try to do something to persuade the workers that it is important for the country to increase productivity and to achieve better delivery times overseas so that we can increase trade?

Mr. Smith: The hon. Member is absolutely right to draw the attention of everyone in industry—trade unionists and management alike—to those important factors. Together with the CBI the TUC is a sponsor of the Export United Campaign which is dedicated to increasing the awareness of everyone in the country of the export trade which will increase jobs and prosperity. I make it a practice to take a leading trade unionist on every trade mission that I attend abroad. That helps to create a wider measure of understanding.

Mrs. Wise: Does not my right hon. Friend think that, in view of the importance placed on import substitution by the TUC and in the joint statement by the TUC and the Government, it is now time that at least one of the 7,000 people employed in his Department should spend his entire time grappling with the problem of import substitution?

Mr. Smith: I understand that a great deal of effort is made by a number of people, but not on a full-time basis. I am always willing to look at suggestions


for the improvement of the working of the Department. I shall examine the suggestion. My hon. Friend should recognise that more than the Department of Trade is involved. All the sector working parties under the industrial strategy are under an obligation to maximise the scope for import substitution.

Mr. Rhodes James: Has the Secretary of State had any discussions recently with representatives of small businesses, especially since small exporters, though individually small, collectively represent a significant part of our export trade?

Mr. Smith: I think it extremely important to maximise the opportunities for small businesses in the export trade. This may be an area which has not been given sufficient attention in the past, and that is why I am happy that we now have the market entry guarantee scheme, which is specifically designed to encourage small firms to engage in exports.

Mr. Ioan Evans: In addition to pursuing efforts on the export drive with the TUC and the CBI, will my right hon. Friend discuss with the TUC and CBI the need to reduce imports of products which we produce equally well in this country, and to this end will he consider having a"Buy British"campaign in the near future?

Mr. Smith: As I said to another of my hon. Friends earlier, we place high importance upon import substitution, since every exercise in import substitution is as valuable as the achievement of a further export contract. We believe that the best way to do that is to engage the attention of all the sector working parties in the industrial strategy, and there are some good examples of that—some in the footwear trade, for instance—which are having success.

Motor Vehicles and Vehicle Equipment (Exports)

Mr. Dykes: asked the Secretary of State for Trade what are the prospects for an improvement in 1979 in the trend of United Kingdom exports of motor vehicles and motor vehicle equipment.

The Under-Secretary of State for Trade (Mr. Michael Meacher): The Society of Motor Manufacturers and Traders forecasts that in 1979 the number of cars

produced for export will increase by 5 per cent. to 520,000, and the number of commercial vehicles by 9 per cent. to 185,000. Forecasts for motor vehicle equipment are not available.

Mr. Dykes: I thank the Minister for those figures. Can he explain the reasons behind the contrast in recent times between the relative success of vehicle equipment and accessories exported and the disappointing performance of motor vehicle exports? Does he think that the situation will be better this year? Secondly, in view of the shocking press which the motor vehicle industry has had in foreign newspapers recently over industrial unrest, and so on, is the Minister now satisfied that on delivery dates, keeping to specification and quality control, our reputation overseas will be better this year?

Mr. Meacher: I should certainly like to give the hon. Gentleman a full assurance on all those counts. He will recognise that this is a complex matter. There are extremely detailed consultations and procedures, in particular between the Department of Industry and the four production companies in this country. But I am confident that the latest forecasts represent a significant upturn and a considerable improvement on 1978, which I agree was a disappointing year.

Mr. Marten: Does the Under Secretary of State recall an answer which he gave a few months ago to the hon. Lady the Member for Coventry, South-West (Mrs. Wise) about trade with the EEC in passenger motor vehicles, in respect of which in 1970 there was a crude surplus of £5·4 million and in 1977 there was a crude deficit of £750 million? Does the hon. Gentleman have the 1978 figures?

Mr. Meacher: I do not have the 1978 figures, though I take the point which the hon. Gentleman makes. I am concerned about the high level of tied imports from the EEC by the American multinationals in this country, which last year, I think, accounted for 11 per cent. to 12 per cent. of all our imports. I hope that all of them, and Ford in particular, will increase their production of cars in this country rather than in the EEC.

Sir Anthony Meyer: Will the Under-Secretary explain to my hon. Friend the


Member for Banbury (Mr. Marten), and to hon. Members on his own side who would like to turn the EEC into a free trade area, by exactly what mechanism that would enable the British balance of trade in motor vehicles to be dramatically improved?

Mr. Meacher: My understanding is that the European Economic Community is already a free trade area. The real issue is whether that works to our advantage or disadvantage in the medium term.

Steel (Dumping)

Mr. Litterick: asked the Secretary of State for Trade what reply has been made to the representations made to the EEC by his Department on behalf of the British metal fastener industry about the dumping of steel by certain European steel producers.

Mr. Meacher: None as yet. The Commission requires detailed prima facie evidence of price breaches. This is hard to come by, but the industry is excepted to assemble this evidence soon.

Mr. Litterick: I am sure that my hon. Friend will recognise that that is a disappointing answer. Will he take on board that it is now four months since representatives of the British metal fastener industry came to Westminster and explained in detail to hon. Members on both sides of the House what was being done by European manufacturers of metal fasteners with the aid of dumped steel manufactured by Western European—that is, Common Market—steel manufacturers?

Mr. Meacher: I appreciate the long time lag in this matter. There is a significant issue. The real problem is that the steel used in the production of wire rod from which metal fasteners are made is not subject to the Davignon mandatory minimum prices and the wire rod itself is subject only to guidance prices which are not legally enforceable. The only provision which is possible in these circumstances is to tighten up the guidance prices for wire rod, and this means, in particular, providing more precise definition of the guidance prices for various sizes and specifications of material, whereas at present there is only one guidance price which is too crude. It is this which the industry is pressing for, and we are strongly supporting it.

Mr. John Ellis: Does my hon. Friend realise that assurances have been given from the Dispatch Box that, all in all, the Davignon agreement was working well but that it now appears that there are whole areas of steel, special steels and other steels, to which Davignon does not apply and there do not appear to be any satisfactory arrangements at all? Will my hon. Friend arrange for a document to be circulated to interested Members or for something to be put in the Library showing the real facts and figures, showing where Davignon applies, where it does not apply, what dumping of steel is going on from the Common Market and what dumping is going on from outside the Common Market, so that we may realise where we are?

Mr. Meacher: I shall be only too pleased to try to provide information setting out the position not only under the Treaty of Rome but under the Treaty of Paris. The problem is that Davignon measures apply only to ECSC-Treaty of Paris goods, whereas metal fasteners are covered by the Treaty of Rome, which does not allow the Commission to recommend or fix prices. That is the basic problem with which we are saddled. But I shall certainly try to give my hon. Friend and others the necessary information.

Paper and Board (Duty-free Quotas)

Mr. Marten: asked the Secretary of State for Trade if he will make a statement on the latest position concerning duty-free quotas for paper and carton exports from Norway to the United Kingdom.

Mr. Meacher: The quota for uncoated mechanical printing and writing paper has been increased by 2,730 tonnes to 34,705 tonnes, and the quota for miscellaneous paper and board has been increased by 670 tonnes to 2,427 tonnes.

Mr. Marten: Does that amount to the increased maximum? Secondly, should we not be trying to exercise a rather more liberal policy towards our old EFTA friends in these matters?

Mr. Meacher: It does not amount to the permitted maximum, which is 5 per cent. under the EEC-EFTA agreement of 1972. It amounts to about 2 per cent., which was the agreed increase for this


year, agreed at the end of last year. Taking into account the state of the British paper industry as well as the requirements of United Kingdom users and also our treaty obligations to our EFTA partners under that agreement, we believe this to be the maximum which we could afford consistent with our commitments to our own industry. I should add that Norway does better than any of the other EFTA countries, because about 84 per cent. of all its paper sendings to this country come in duty-free.

European Community (Coastguard Service)

Mr. Jay: asked the Secretary of State for Trade whether he will make a statement on the proposal for an EEC coastguard service.

The Under-Secretary of State for Trade (Mr. Clinton Davis): The European Parliament has sent forward proposals to the Commission for the establishment of a Community coastguard service further to the common policy for the conservation and management of fishing resources. The Commission has not yet put any proposals to the Council of Ministers.

Mr. Jay: Do the Government see any need for any EEC coastguard service?

Mr. Davis: As to the specific purpose for which this is designed, that is really a matter for my right hon. Friends the Minister of Agriculture, Fisheries and Food and the Secretary of State for Scotland. I am sceptical about the need for search and rescue to be mounted through an EEC coastguard service. I think that the job is very well done as a national service, and I believe that this would be an excuse for added costs and unnecessary duplication.

Mr. Watt: Can the Minister tell the House that he will be vigilant on this matter and make sure that he does not allow boats of any proposed EEC coastguard service to enter British waters? If he does, it will mean that he is finally handing over the fish stocks of Britain to our EEC partners.

Mr. Davis: This is a matter for my right hon. Friends. I do not have responsibility in that area.

Mr. Adley: Does not the Minister accept that the EEC provides a useful

framework, particularly on the control of pollution? Will he keep an open mind on these matters until the Government have had a chance to study the proposals fully and perhaps to seek the views of hon. Members representing coastal constituencies?

Mr. Davis: Naturally. I will await any specific proposition that is advanced. Nevertheless, I am sceptical about whether the EEC has a role in relation to anti-pollution measures. This is a matter where the EEC certainly has a role to play through enforcing agreed international solutions.

European Community (Council of Trade Ministers)

Mr. Goodlad: asked the Secretary of State for Trade when he expects next to meet his EEC counterparts.

Mr. John Smith: I regularly attend meetings of the EEC Foreign Affairs Council when trade matters are discussed. I expect to attend the Council on 2 and 3 April.

Mr. Goodlad: When the Secretary of State next meets his EEC colleagues, will he discuss with them the threat posed to the paper and board industry by the demands of the United States for concessions in the last round of the GATT negotiations? Is he aware of the serious threat that would be posed to employment if the market was flooded with low-priced competition from the United States in a period of slack domestic demand?

Mr. Smith: The hon. Gentleman raises an important issue which has concerned us during these discussions. I regard the tariff cuts proposed by the United States as excessive. I also regard as excessive the extent to which the Commission proposes that the Community should accede to those demands. That is something upon which the British Government will make their views very clear during the next meeting of the Council of Ministers.

Mr. Clemitson: How does my right hon. Friend justify the fact that, whereas about 40 per cent. of our total trade is now done with the EEC, less than 1 per cent. is done with India?

Mr. Smith: That is a very wide ranging question, and Mr. Speaker would call me to order if I attempted to answer it


at any length. Our policy is to do as much trade as we can with as many countries as we can. We bear in mind that India is now the tenth largest industrial country in the world.

Mr. Arnold: Why are the Secretary of State and his colleagues in the EEC prepared to take a robust attitude to negotiations with the United States on the question raised by my hon. Friend the Member for Northwich (Mr. Goodlad) earlier, but not in regard to textiles and the multi-fibre arrangement?

Mr. Smith: I do not see how it is possible for the hon. Gentleman even to mount a case that the Government have not been vigilant about the textile industry. This Government have done more to create circumstances in which the textile industry is protected from low-cost imports than any other Government have ever done. That industry now has wider protection than ever before in the history of the industry.

Mr. James Lamond: I agree with all that my right hon. Friend has said. Is he not aware that it is the impending agreement that is causing concern, and that the United States will gain considerably if they are successful in their proposals at the Tokyo round?

Mr. Smith: As I think my hon. Friend knows, these negotiations are not yet complete. I listened very carefully to the representations made by the industry. Where cuts in tariffs might assist the textile industry, these have to be balanced against cuts in our tariffs. It is a very fine calculation, but I assure my hon. Friend that I bear the interests of the industry very much in mind.

British Airports Authority

Mr. Walters: asked the Secretary of State for Trade what recent discussions he has had with the chairman of the British Airports Authority.

Mr. Clinton Davis: Department of Trade Ministers have frequent discussions with the chairman of the British Airports Authority.

Mr. Walters: What suggestions, if any, has the Minister made to the chairman to improve the industrial jungle at London airport, which makes life for passengers almost always inconvenient and frequently

a nightmare? It is the worst possible advertisement for Britain. Specifically, has the Minister received assurances that, should it ever snow again in this country, the farce of last January will not be repeated?

Mr. Davis: As to industrial relations affecting the British Airports Authority, the situation has been extremely good. There have been very few strikes and little industrial relations trouble. The British Airports Authority has put forward proposals, which are currently being considered, for a greater degree of industrial democracy on the board. I welcome that. The difficulties during the winter months are not unknown, and this kind of situation has developed at other airports. However, I know that it is a matter which the British Airports Authority is urgently considering.

Mr. Haselhurst: Has the Minister had discussions with the chairman of BAA about the Government's intention, unveiled last year in the White Paper, to bring terminal developments under general planning procedures? When may we know what the Government's final decision will be on this matter?

Mr. Davis: Totally new terminal developments are already under planning procedures. The application for a fourth terminal at Heathrow is currently the subject of an inquiry and, indeed, an application for planning permission has been submitted by the BAA in respect of the second terminal at Gatwick. I do not know what the hon. Gentleman is talking about.

Current Account Surplus

Mr. Knox: asked the Secretary of State for Trade what was the United Kingdom's current account surplus in the most recent month for which figures are available.

Mr. John Smith: In January there was a current account surplus of £1 million.

Mr. Knox: In view of the substantial and increasing benefits from North Sea oil, why was the surplus so low?

Mr. Smith: I would always wish that the surplus was higher, although the hon. Gentleman will notice that the surplus for 1978 was £254 million. It must be


the job of everybody to increase our manufacturing performance so that we improve these figures.

Mr. Skinner: Will the Minister confirm that one of the reasons why the surplus is not as good as it should be is that we have a £2½ billion trade deficit with the Common Market? Are we not further bothered by the fact that it arises out of our contribution to the Common Market budget, which is roughly £20 for every man, woman and child? That is affecting the invisibles also and worsening the situation.

Mr. Smith: My hon. Friend is correct to draw attention to this situation in regard to invisibles. With regard to the United Kingdom contribution to the Community, he knows the figures and the stance which my right hon. Friend the Prime Minister has taken and which he intends to pursue at the highest level within the Community.

Mr. Tim Smith: What is the effect of the current exchange rate, coupled with rising unit labour costs, on industrial competitiveness? What is the Government's present policy with regard to the exchange rate? Will they seek to maintain the exchange rate at about the present level, or will they seek a gradual reduction in order to assist exporters?

Mr. Smith: The hon. Gentleman invites me to enter a very delicate area of economic policy. He really should address this question to my right hon. Friend the Chancellor of the Exchequer.

Mr. Madden: Is the Secretary of State aware that a spokesman of the Scottish CBI is reported today as having said that the advent of a Tory Government would do nothing to improve Britain's trade position?

Mr. Smith: I am pleasantly surprised that such good sense comes from the Scottish CBI.

Mr. Nott: Can the Secretary of State say how it is possible for any Government to get their forecasts of the current account surplus so hopelessly wrong? Only 18 months ago the Chancellor of the Exchequer predicted a current account surplus of over £1,000 million. A year ago in the Budget the Government predicted a surplus of several hundred million pounds, but now we are just

breaking even. Now that the Secretary of State has fairly recently taken over the job from his predecessor, will he be giving better advice to the Chancellor of the Exchequer on the future direction of our overseas trade and will the forecasts be rather better than in the past—certainly those for the coming year?

Mr. Smith: I do not know how far my predecessor was responsible for the advice given to the Chancellor of the Exchequer. Obviously these are matters which are extremely difficult to forecast. I do not think that getting them right or wrong is the prerogative of any particular Government. My main concern as Secretary of State for Trade is to improve our trading prospects as best I can. I am more concerned with doing that than with getting figures correct.

Third London Airport

Mr. Haselhurst: asked the Secretary of State for Trade whether his Department has now formed a view as to the optimum size of the third London airport; and if he will make a statement.

Mr. Clinton Davis: The advisory committee on airports policy was established to advise on these matters. I understand its current view is that a new airport should have the potential to be expanded ultimately to include two runways and to handle around 50 million passengers a year.

Mr. Haselhurst: Do the Government accept the view which appears to be emerging from the advisory committee on airports which was set up by the Government? Is not the swift formation of that view by the advisory committee rather a marked contrast to the calculated vagueness of last year's White Paper?

Mr. Davis: It would be quite wrong for me to prejudge the consideration of these matters by the advisory committee and by the study group on South-East airports. They have put forward this view, but of course it will have to be the subject of a consultation document in due course which the Government will have to approve in principle.

Mr. Costain: The Minister's Department cancelled Maplin and the Channel tunnel, but does the Minister appreciate


that British Rail is now trying to reincarnate the Channel tunnel? Will not this have a bearing on the need for a third London airport, and when will the Government make a decision on the Channel tunnel?

Mr. Davis: I think not. The hon. Gentleman will no doubt address his question on the Channel tunnel to my right hon. Friend the Secretary of State for Transport.

Mr. Jessel: Since the Government White Paper last year was quite clear about the fact that a third London airport would be needed sooner or later, is it not better to get on with that as quickly as possible instead of planning to enlarge Heathrow and Gatwick, thereby increasing the suffering of people living round those airports?

Mr. Davis: The extensions at Heathrow and Gatwick were spelled out in the White Paper. They are inevitable, as, indeed, is some expansion at Stansted and Luton. The fact is that we must deal with the short and medium term as well as the long term. As to long-term development, I believe that it is absolutely right to have a proper basis of consultation, so that people who have a direct interest in these matters will have an opportunity to have their say as a result of which they cannot allege that the man in Whitehall knows best.

China

Mr. Shersby: asked the Secretary of State for Trade what is the value of British exports to China for the latest 12-month period for which figures are available; and what are the prospects for increasing trade during the next 12 months.

Mr. John Smith: The value of United Kingdom exports to China for the year ending December 1978 was £91,093,000. Following the signing of the economic co-operation agreement during my right hon. Friend the Secretary of State for Industry's recent visit to China, there are excellent prospects for a considerable increase in our trade with China, not only over the next 12 months, but increasingly in the longer term.

Mr. Shersby: Is the Secretary of State aware that the announcement of increased

prospects of trade with China is welcome? Will he say exactly what orders have been placed? What is proposed in terms of the line of credit? Will that involve any buy-back arrangements?

Mr. Smith: The agreement that was reached by my right hon. Friend was an economic co-operation agreement, which creates the framework for our future commercial relationships with China. During his visit, leading representatives of British industry made significant progress towards achieving contracts, although I do not think that any were signed. We have made arrangements for credit under ECGD. The question of buy-back arrangements is always a problem when dealing with State trading companies, and that will have to be resolved in the context of each individual contract.

Mr. Norman Atkinson: It is true that an agreement has been signed which spells out economic co-operation for the future, but will my right hon. Friend now confirm that, because not one hard contract has been signed between the two countries, the view taken by the technical representatives who were in China is that those contracts are never likely to be signed and that the co-operation agreement is not worth the paper that it is written on?

Mr. Smith: I do not think that my hon. Friend does a great service to British industry, and to the great efforts that are being made to secure contracts in China, by statements of that kind. I refer him to the views of the publicly-owned industries, particularly the National Coal Board and the British Steel Corporation, which have very high hopes of increasing trade with China.

Mr. Blaker: Will the Secretary of State give an assurance that the official export credit arrangements for exports to China are at least as favourable as those in relation to exports to the Soviet Union, bearing in mind that the latter is hostile to us whereas China is not?

Mr. Smith: I do not want to enter into arguments as to the relative merits of trade with the Soviet Union and China. However, I can tell the hon. Gentleman that the Government have expressed their willingness to support credit of up to £2·5 billion until 1985.

Tourism Development Areas

Mr. Adley: asked the Secretary of State for Trade what further considerations he has given to the creation of tourism development areas, as distinct from industrial development areas; and if he will make a statement.

Mr. Meacher: As my right hon. Friend announced in a written answer on 22 November last year, we shall be reviewing the areas eligible for tourist project assistance in two or three years time. In principle, I favour tourist development areas, but we would need additional funds to launch them.

Mr. Adley: Is the Minister aware that the acceptance of the principle will be welcomed, whether or not extra funds are provided or present funds reallocated? May I take it from that that he accepts the proposition that tourism has different requirements from manufacturing industry and that one of the main problems on the British tourist scene is the decaying tourists towns around our coastline, many of which are not in development areas? Does he think that his proposals will help those areas or those who want to invest in those areas?

Mr. Meacher: I am glad that the hon. Gentleman accepts the proposed increase in public expenditure that is involved here, even if not in other areas. As I am sure he will know, we have extended the coverage of section 4 assistance to the intermediate areas which, for example, will take into account Blackpool, South-port, Morecambe, Colwyn Bay and Skegness. Many of them are the sort of towns that I believe the hon. Gentleman had in mind. For the rest of the country, two-thirds of all tourist disbursements by the English Tourist Board is in respect of publicity, promotion and research, none of which is territorially limited.

Mr. Ronald Atkins: Does not my hon. Friend agree that there is extra need for tourism to be extended from London and the Home Counties to some of the remote areas, especially those areas that have pockets of unemployment? Falmouth is an example, as indeed, are many parts of Cornwall, Scotland, the North-East and elsewhere.

Mr. Meacher: That is why in November 1974 this Government launched the tourism guidelines, precisely to concentrate the attractions of tourists to those areas which have great natural beauty and untapped tourism potential but which at the same time have the greatest economic need in terms of higher unemployment.

Mr. Anthony Grant: I very much welcome the Government's change of attitude on this subject. But is it not quite absurd to pump public money into places where tourists simply will not go and where they will not even be seen dead in? Since the Government appoint the tourist boards, why not let the Government fix the public expenditure limit and then let the tourist boards decide how best that should be applied, because they know more about it than Ministers and civil servants?

Mr. Meacher: There are many parts of the country, particularly in Scotland, Wales and the West Country where, far from wishing to be seen dead, people wish to spend their holidays, and be seen very much alive, for as much of the year as they can. As to fixing public expenditure and leaving the decision to the tourist boards, we make an allocation to them and it is up to them how they spend their money. We have guidelines, but we listen to the advice of the boards with regard to the construction or changes in the guidelines. That is one of the reasons why we have this modification in policy.

Her Majesty's Coastguard

Mr. Beith: asked the Secretary of State for Trade what further representations he has received about the reorganisation of Her Majesty's Coastguard since the debate on 22nd January.

Mr. Clinton Davis: Representations have been received about future manning levels at three coastguard stations on the North-East coast and at two stations in Cornwall.

Mr. Beith: Has the Minister yet had a report of the meeting at Seahouses on 3 March, which he agreed to arrange during the debate that is referred to in the question? Is he aware that, after detailed explanation from senior coastguard representatives, all those present,


representing the fishing industry and other boating interests, expressed unanimous opposition to the proposed reduction in watch keeping by regular coastguards?

Mr. Davis: I am aware of some reluctance to accept these changes on the part of a number of people who feel that they will be adversely affected by them. But, when they are seen to be working in practice, I believe that that reluctance will disappear. What we must concentrate our minds on is a rationalisation of the coastguard service so that it can best undertake the task which it is required to perform, particularly in its expanding role dealing with the Channel navigation information service, anti-pollution, the monitoring and reporting of cargoes and so on. Unless we apply our minds to a rationalisation process, I do not believe that we shall get the best out of the coastguard.

Motor Vehicles (Imports)

Mr. Hal Miller: asked the Secretary of State for Trade what are the shares of United Kingdom passenger and commercial vehicle registrations taken by imports in January and February of the current year as compared with the same two months in 1978, and with 1978 as a whole.

Mr. Meacher: Imports accounted for 52·3 per cent. of new car registrations in February compared with 47·6 per cent. in February last year and 49·3 per cent. in 1978 as a whole. For new commercial vehicle registrations, imports accounted for 18·7 per cent. in February. This compared with 21·6 per cent. in February last year and 21·4 per cent. in 1978 as a whole. I shall give the remaining information requested in the Official Report.

Mr. Miller: I thank the Minister for those figures. Does he agree that those increased imports show that there is now one effective European car and vehicle market? Will he therefore enter into discussions with his Common Market colleagues to discuss the future pattern of trade in those vehicles?

Mr. Meacher: For many years, there has been a free trade area within the Community, which applies to the motor vehicle industry in the wider sense as it

does to other products. I do not think that there needs to be discussion at governmental level. We must make sure that our own companies take full advantage of the opportunities that are offered and that we get a benefit in terms of international specialisation within this wider market.

Mr. Cryer: Does not my hon. Friend agree that over the past few years the import penetration of cars and commercial vehicles indicates that we need to regulate our international trade in manufacturing products over a much wider range, in the same way that we regulated our textile affairs through the multi-fibre arrangement? Will it not be necessary to extend that sort of quota coverage to retain some manufacturing development and ability in this country? Does not that mean that we must take a strong stand on this matter within the Common Market?

Mr. Meacher: As my hon. Friend is well aware, in textiles the multi-fibre arrangement consists of about 30 bilateral arrangements between the EEC and low cost producers that are mainly in South East Asia. As for car production, he will be aware that about 70 per cent. of our imports come from the EEC. That is a completely different matter. As he knows, what he is suggesting is completely outwith the Treaty of Rome.

Mr. Nott: Apart from the Treaty of Rome, is it not the case—

Mr. Cryer: How can we ignore it?

Mr. Nott: —that we have an enormous surplus in motor car components? Can we expect other countries to continue buying our motor car components as at present and in increasing quantities if we talk about placing import restrictions on motor vehicles from other countries?

Mr. Meacher: The hon. Gentleman is right to say that the motor vehicle industry has a substantial surplus in its balance of trade. However, my hon. Friend would point out—I do so on his behalf—that the surplus has decreased from £900 million in 1975–76 to £400 million last year. That is a substantial drop, and it means that we must have a strategy that will not only hold the present position but restore our former position.

Following is the information:


NEW CAR REGISTRATIONS


1979
percent


January
53·9


February
52·3


1978


January
50·0


February
47·6


1978 (year)
49·3


NEW COMMERCIAL VEHICLE REGISTRATIONS


1979


January
21·0


February
18·7


1978


January
18·0


February
21·6


1978 (year)
21·4

These figures are published by the Society of Motor Manufacturers and Traders.

Patent Applications

Mr. David Mitchell: asked the Secretary of State for Trade what was the number of patent applications filed by individuals in the last year before the bringing into operation of the Patents Act 1977, compared with the most recent 12-month period operating under the new Act.

Mr. Clinton Davis: The expense of collecting all the information requested would not be justified and, in any case, the new Act has not yet been in operation for 12 months. Samples indicate that the proportion of applications where the applicants were individuals was 26·8 per cent. under the old Act and is 25·4 per cent. under the new Act.

Mr. Mitchell: Does the hon. Gentleman agree that there has been a decline in the number of registrations since the new Act came into operation? As it is the maternity award of modern British industry, is it not time that something was done to ease and encourage the registration of new inventions?

Mr. Davis: It is far too early to make such judgments. The Act has not yet been in operation for 12 months. I believe that the Act will operate to encourage and facilitate a quicker use of the new procedures that are available. That will be to the advantage of all concerned.

UNCTAD V (Common Fund)

Mr. Hooley: asked the Secretary of State for Trade what are the views of

his Department on the common fund which will be discussed at UNCTAD V.

Mr. John Smith: We hope that further progress towards agreement on the structure of a fund based on international commodity agreements will be achieved before UNCTAD V, in the negotiations which resume today in Geneva.

Mr. Hooley: Does my right hon. Friend agree that it is very much in the interests of Britain to bring stability into international commodity markets? Will he give an assurance that Her Majesty's Government will on this occasion pursue a constructive policy with a view to achieving agreement in UNCTAD V unlike our rather dismal performance in UNCTAD IV?

Mr. Smith: I can confirm our commitment to the establishment of a fund. I have no doubt about the political importance of securing an early agreement. Equally, we must ensure that the fund is set up on a basis that will usefully assist commodity agreements without undermining the financial responsibilities of producers and consumers and without disrupting commodity trade. I hope that we shall be able to bring the negotiations to a conclusion.

Mr. Higgins: The right hon. Gentleman has expressed his hope, but what positive and specific steps is he taking to promote it?

Mr. Smith: I have given positive instructions to those who are representing the United Kingdom at the discussions. There are some complex matters, especially the financial magnitudes involved. If there is a willingness to reach agreement not merely on the part of the United Kingdom but on the part of other countries, I believe that it can be done.

Mr. Spearing: I am pleased that my right hon. Friend has acknowledged the need to make progress. I agree that it would not be appropriate before UNCTAD V to publish the entire negotiating posture of Her Majesty's Government, but will he be able to publish something of the difficulties that he believes have to be solved before this progressive measure may be implemented?

Mr. Smith: I am sure that my hon. Friend will agree that that might be difficult as the negotiations start today. I am


always willing to answer the questions that hon. Members table. Where financial negotiations are involved, I believe it wiser to let our negotiators have a freer hand.

Ships (Registration)

Mr. Dodsworth: asked the Secretary of State for Trade how many ships have moved from British flag registration in the last four years.

Mr. Clinton Davis: During the period 1975 to 1978 inclusive 760 vessels were removed from the United Kingdom register. After taking into account 314 additions, the net loss was 446.

Mr. Dodsworth: That reflects the restriction of and contraction in world shipping trade and registrations but does the hon. Gentleman accept that a number of companies are concerned about potential restrictions on their right to transfer ships abroad? Has he had the opportunity of examining the correspondence from Sea Containers Incorporated, which has 21 ships registered in this country and which says that it will no longer register ships here if any restrictions are introduced?

Mr. Davis: It is not right that the hon. Gentleman should use a certain line of correspondence to try to deflect the Government from what is obviously a sensible policy in clause 31 of the Merchant Shipping Bill, in respect of which the Tories were soundly defeated.

Exports

Mr. David Price: asked the Secretary of State for Trade what is his latest estimate of the likely growth in United Kingdom exports from 1977 to 1980, taking into account the probable effects of the Iranian revolution.

Mr. Meacher: No official forecasts have been published covering the period to the end of 1980.

Mr. Price: Does the Minister agree that, in view of what happened in Iran, where we have £750 million worth of exports at risk, the majority in manufactured goods, and also in view of the fact that other OECD countries have an even bigger stake in their exports to Iran, this is bound to have a ripple effect on

world trade? Therefore, would we not be prudent to lower our estimates of what is likely to be the increase in world trade in the foreseeable future?

Mr. Meacher: That is entirely fair comment. Iran accounts for about 2 per cent. of our total exports. Other countries have deeper involvement in the Iranian market and therefore stand to lose more. It explains why the ECGD has withdrawn cover from new Iranian buyers. I am encouraged by the resumption of oil production on 5 March and also by the fact that the governor of the central bank of Iran stated that his Government intend to honour their commitments.

Mr. Nott: What is our total accumulated ECGD commitment to Iran?

Mr. Meacher: There are good commercial reasons in the interests of British industry why the commitment of the ECGD in any market is kept confidential.

Oral Answers to Questions — LAMBETH PALACE

Mr. Arthur Latham: asked the hon. Member for Kingswood, as representing the Church Commissioners, what is the current value of Lambeth Palace and its grounds; what proportion of the accommodation is used for residential purposes; to what other uses it is put; and whether there is any real or book income arising therefrom.

Mr. Terry Walker (Second Church Estates Commissioner): It is not possible to put a meaningful value on Lambeth Palace, which is a grade I listed building in a conservation area and with grounds zoned for planning purposes as"open space ". Its annual value for rating purposes is £11,638. Within the palace and its associated buildings there are 22 units of residential accommodation, including the Archbishop's own 3-bed-roomed flat. The remaining accommodation comprises offices used by the Archbishop's official staff, the chapel and State rooms, and the Lambeth Palace library which has an international reputation and is open to students. Rents are obtained from eight of the residential units.

Mr. Latham: I am sure that the whole House was interested in my hon. Friend's revealing answer about Lambeth Palace.


May I express my disappointment to my hon. Friend about the fact that from his answer I cannot calculate the value of the residential part of the palace in terms of tax free allowance? He may be able to write to me about that. In considering alternative use, has it been considered whether the palace might be a good centre for the low paid or a refuge for those suffering from excessive rent increases in my constituency? Finally, will he confirm that the Archbishop is not remote from, innocent of and ignorant of what hard-headed businessmen at Mill-bank are doing? Is it not a fact that he is the chairman of the board of governors of the Church Commissioners and is therefore responsible for excessive rent increases? Is it not the fact that the Archbishop has personally endorsed and condoned this example of greed by the Church?

Mr. Gow: On a point of order, Mr. Speaker. Is not the Archbishop a Member of another place? Was not the supplementary question of the hon. Member for Paddington (Mr. Latham) an attack upon the Archbishop, and should it not be withdrawn?

Mr. Speaker: The hon. Member for Eastbourne (Mr. Gow) is wrong. He suggests that it is out of order to cast any reflection upon a Member of another place or of this place. The hon. Member for Paddington (Mr. Latham) had to deal with the Church Commissioners.

Mr. Arthur Latham: Further to that point of order, Mr. Speaker. I said in the course of my supplementary question that the Archbishop was not remote and ignorant.

Mr. Stokes: Is the hon. Gentleman aware that most people believe that the Archibishop's historic residence is most suitable for him, and that most people hope that the hon. Member for Paddington (Mr. Latham) will cease his vendetta against the Archbishop?

Mr. Walker: As I have replied before to my hon. Friend the Member for Paddington (Mr. Latham) and to others, the commissioners seek a fair rent on residential properties and have special arrangements to deal with hardship cases. The Primate is the chairman of the

Church Commissioners and, therefore, is kept fully informed, as are all Church Commissioners.

QUESTIONS TO MINISTERS

Mr. Cryer: On a point of order, Mr. Speaker. I should be grateful for your guidance on the matter of Question Time. It is a convention in debates that hon. Members declare any financial interest at the beginning of a debate. I wonder whether it would not be prudent for you, Mr. Speaker, to advise hon. Members on what they should do during Question Time when they have a financial interest. For example, it may well be, in relation to question No. 17 by the hon. Member for Christchurch and Lymington (Mr. Adley), that he has an interest of some kind in tourism. Where that occurs, it would only be fair to the House and, more important, to those reading the record of our proceedings to see that any financial interest is declared. I know that the Register of Members' Interests has tended to fade into some degree of desuetude as there is not the easy access of publication that there should be. That lack of a declaration does not help the reputation of this House and tends to evoke criticism. To help you defend that criticism, Mr. Speaker, I would urge you to advise hon. Members to make such declarations in debates and at Question Time in this Chamber.

Mr. Speaker: It is a long-established custom in the House that a declaration of interest is not required from hon. Members during questions—only during debates.

Mr. Hugh Jenkins: On a point of order, Mr. Speaker. Is it not the case that, if you had not allowed a point of order during Question Time to the Church Commissioners, question No. 26 and even possibly question No. 27 to the Secretary of State for Trade would have been reached?

Mr. Speaker: The hon. Member knows that I normally do not take a point of order during Question Time. However, this point of order came at the very end of it. I doubt whether we would have taken another two questions. We might have had one.

Mr. Adley: On a point of order, Mr. Speaker. I would have referred to the hon. Member for Keighley (Mr. Cryer), but he is not worth referring to.
What protection can you, Mr. Speaker, give to Back Benchers in the following circumstances? The Under-Secretary in answer to a question referred to increasing public expenditure, whereas in my supplementary question I made it clear that I was not asking for that. What protection do we have?

Mr. Speaker: Order. I can never help any hon. Member who is dissatisfied with an answer.

Mr. Cryer: Often, Mr. Speaker, you answer points of order by saying"It has been a tradition in this House." That may well be so. I can understand your relying on that in your answer. Nevertheless there are people both outside and inside the House who recognise that improvements and adjustments need to be made. Indeed, I am sure you will recognise that Parliament, if it is to keep abreast and answer criticisms, must produce some change. How shall we effect that change if, whenever a valid point is raised about financial interests within the Chamber and the House, the answer is always"We have always done it that way, so we shall not change it "?

Mr. Speaker: Order. May I explain to the hon. Gentleman, first, that the House

decided by resolution that a declaration of interest is not necessary at Question Time. As the House decided that, only the House—not I—may change the rule. The hon. Gentleman knows that I am the servant of the House. It is not for me to overrule the resolutions of the House.

Mr. Norman Atkinson: Further to that point of order, Mr. Speaker. I am sure that it must be within your recollection that last week the hon. Member for Christchurch and Lymington (Mr. Adley) put to you a series of points about the Minister of State, Department of Health and Social Security, who, the hon. Gentleman suggested, had some kind of personal interest as a result of his membership of the National Union of Public Employees. He suggested to the House that the Minister of State should declare his interest in a trade union—quite wrongly, because the Minister receives no private gain as a result of his membership of NUPE. However, here is another Member of Parliament who is directly employed to put a point of view on behalf of commercial interests to the House. The hon. Gentleman acknowledges that he receives personal profit from those interests. However, he has the brass neck to accuse the Minister of State of gaining from his membership of the union—

Mr. Speaker: Order. I have explained the position to the House.

NORTHERN IRELAND (PRISONERS)

Mr. Neave (by private notice): Mr. Neave (by private notice) asked the Secretary of State for Northern Ireland if he will make a statement on the allegations made by the official doctor of the RUC about ill treatment of prisoners by the Constabulary.

The Minister of State, Northern Ireland Office (Mr. J. D. Concannon): Allegations of ill treatment can be effectively dealt with only if the cases are identified. As my right hon. Friend made clear at the time that he set up the Bennett committee to inquire into police interrogation procedures, there is an established system for dealing with complaints against the police under which any allegations of ill treatment are investigated, the results of the investigation being put to the Director of Public Prosecutions for Northern Ireland, who decides whether to prosecute. The same standards of justice are applied to those suspected of crime, whether within the security forces or outside. I remind the House that the RUC is striving to protect the people of Northern Ireland from terrorists who would rob them of their most fundamental human right—the right to live, and to live in peace.

Mr. Neave: Although the allegations made are extremely serious, is the Minister aware that the"Weekend World"programme yesterday will be seen as a calculated attack on the administration of justice and the security forces in Northern Ireland? Is the Minister aware that in a radio interview today the editor declared that he brought forward the programme to pre-empt the Bennett report, to which the right hon. Gentleman referred? Is it not therefore in the best interests of the RUC to publish that report immediately, so that if there are grounds for Dr. Irwin's allegations, urgent action may be taken by the Government? Would it not have been wiser in the circumstances, with a view to giving a more balanced impression, had the Government spokesman appeared in the programme to explain the position? Whatever the outcome of the report, we all owe an enormous debt of gratitude to the security forces for their courageous achievements in Northern Ireland.

Mr. Concannon: I do not take the security forces for granted, and I shall certainly make sure that the hon. Gentleman's comment is passed on to them.
My right hon. Friend did not refuse to appear on the programme yesterday. He was invited to take part in a programme due to be shown later this month on the general working of the Northern Ireland (Emergency Provisions) Act. It was obvious from the programme that it had been hastily brought forward. That is why it lacked basic content and fair judgment.
My right hon. Friend has had the Bennett report for a few days. He intends to report on this within the next two weeks. However, having read the report I know that it contains 160 pages of closely-typed foolscap. It has over 500 paragraphs. Therefore my right hon. Friend will need a little time to study it.

Mr. Craig: Is the Minister in a position to say how many cases Dr. Robert Irwin reported to the proper authorities, and how many cases went from them to the Director of Public Prosecutions?

Mr. Concannon: Dr. Irwin has in some cases reported such findings in the proper way, but I should add that there were not as many as 150 cases, as was mentioned yesterday. In all cases where he made such reports he was interviewed about them by the police. The results of the police inquiries would have formed part of the material forwarded to the Director of Public Prosecutions in Northern Ireland, who is independent and who alone decides whether to prosecute.

Mr. McNamara: My right hon. Friend will recall that, during the passage of the Northern Ireland (Emergency Provisions) Bill, my noble Friend the Lord Chancellor, the present Solicitor-General, the present Home Secretary and various other Ministers and members of the Cabinet were all concerned about the effects that the measure would have on the quality of justice in Northern Ireland in the long term. That was why we opposed it so much. Will my right hon. Friend therefore inform the House how many people have been convicted on their own statements in the courts, under the scheduled offences, and how many of those cases have resulted in allegations of police brutality and wrongful extraction of confessions?
Is my right hon. Friend able to inform the House why my right hon. Friend the Secretary of State is not here to answer these questions? After the very serious allegations made yesterday about his failure to appear on the television programme, would it not have been a courtesy for him to be here to answer questions, much confidence though I have in my right hon. Friend the Minister of State to answer them?

Mr. Concannon: I think that basically the questions that my hon. Friend is asking were contained in the Gardiner report, but I will make sure that the figures are given to him.
My right hon. Friend is in Belfast at the moment, conducting a security review, which he does every Monday morning. We in the Northern Ireland Office start work very early on Monday in order to get to our office in Northern Ireland. I can assure my hon. Friend that, long before the mechanics of this House were in operation, Ministers were well on their way to Northern Ireland.

Mr. Freud: In view of the total propriety of London Weekend Television's programme yesterday, does the Minister really feel that the Secretary of State did enough in regard to the programme in question? Knowing how much attention Northern Ireland gets at the moment, surely it was the duty of the Secretary of State or the Minister to give his side of the question.

Mr. Concannon: As I said in my opening supplementary answer, the Secretary of State did not refuse to go on the programme. He was asked to appear on a programme to be shown later this month. It was obvious—as I think was obvious from the radio broadcast today—that yesterday's programme was brought forward only to pre-empt the Bennett report. That report will be out shortly and it might be better for the House to await it.

Mr. Stallard: Will my right hon. Friend accept that to many of us, and to many people in the country of all shades of opinion who are very concerned about the continued operation of the emergency provisions, yesterday's television broadcast did a great service? Will he further accept that Dr. Irwin and those who were connected with the programme are to be

congratulated on being prepared to stand up and say what many of us have long been trying to establish, namely, the fact that all is not well with the emergency provisions Act?
As question and answer across the Chamber do not provide the best way in which to deal with the problem, Mr. Speaker, will my right hon. Friend ask his right hon. Friend to initiate an early debate on the emergency provisions Act and security in Northern Ireland?

Mr. Concannon: The emergency provisions Act is discussed from time to time in this House. We have to discuss it by statute at six-monthly intervals, and on those occasions the House is able to pass judgment on it.

Mr. Biggs-Davison: Does the right hon. Gentleman recall that at Question Time on Thursday he undertook that the Bennett report would be published shortly? We were glad of that. What excuse can there possibly be for anticipating, by a form of prosecution on television, without any defence, the publication of that report and its consideration by Members of this House? Should not this total impropriety—if I may disagree with the Liberal spokesman—be considered by the Independent Broadcasting Authority?

Mr. Concanonn: I do not think that this is a question that should be directed at me or at my Department, which is not concerned with television ethics.

Mr. Alexander W. Lyon: No matter how serious the security position in Northern Ireland, Mr. Speaker, it cannot excuse the beating up of prisoners who are under interrogation. Does not the Minister recognise that what is at issue is the question whether the complaints of Dr. Irwin have been properly investigated, and that the anodyne statement put out yesterday by the Northern Ireland Office did nothing to encourage conviction that the matter was being looked at seriously? Is not the real answer to the questions raised by Dr. Irwin to publish the Bennett report as soon as possible?

Mr. Concanonn: My right hon. Friend set up the investigation as a result of the report by Amnesty International and some of the uncertainties indicated in that report. He has had the Bennett report


for only a few days. As I have already said, it is 160 pages long and there are 500 paragraphs. My right hon. Friend must take some time in which to assimilate it. He will publish it as soon as he can.

Mr. Goodhart: I hope that the Bennett report will be published quickly and that it will be followed by a full debate. Is the Minister aware of the resentment that was caused by the remark on the television programme yesterday that members of the Parachute Regiment had opened fire on the civil rights march? Is the Minister aware that this is a travesty of recent history?

Mr. Concannon: I can only reiterate that the Bennett report will be brought out as soon as my right hon. Friend can get it to the House with his own remarks about it. I think that the television programme was hastily brought forward and that it suffered because of that.

Several Hon. Members: rose—

Mr. Speaker: Order. I propose to call those hon. Members who have already risen.

Mr. Watkinson: My right hon. Friend mentioned the fact that certain of these complaints have been investigated and that some are now in the hands of the Director of Public Prosecutions in Northern Ireland. Can he say whether the DPP has finished his inquiries, or whether those inquiries are awaiting the publication of the Bennett report?

Mr. Concannon: The Director of Public Prosecutions in Northern Ireland receives a report on all complaints and decides whether to prosecute. Some of the allegations to which reference was made have already been to the Director of Public Prosecutions and he has made his decision on them.

Mr. Gow: Does the right hon. Gentleman recall that at the very end of yesterday's television programme Mr. Brian Walden said that the Northern Ireland Office and the Secretary of State had been invited to participate in the programme? Will he clarify what he said a moment ago? Is he saying that no such invitation was extended to the Secretary of State?

Mr. Concannon: I am saying that the Secretary of State did not refuse to appear on the programme yesterday. He was invited to take part in a programme due to be shown later this month, on the working of the emergency provisions Act generally. That was the programme that we expected would be going out later this month, after the report of the Bennett inquiry. It was obvious from the remarks on the radio today that yesterday's television programme was hastily brought forward in order to pre-empt the Bennett report. My right hon. Friend the Secretary of State would have had no opportunity of appearing on that programme when he had already been asked to appear on a later programme.

Mr. Litterick: Will the Minister confirm that Dr. Irwin is a part-time police surgeon of some years' standing, and that he is a member of the council of the Association of Police Surgeons of Great Britain and a member of no political or denominational organisation?

Mr. Concannon: Dr. Irwin is a member of the Association of Forensic Medical Officers of Northern Ireland, whose members have contracted with the police authority to attend police stations where necessary. Most members of the association are also engaged in general practice. As I have said, procedures exist for the investigation of allegations from whatever source they may come.

Mr. Rhodes James: Is the Minister aware that it is now perfectly clear from the exchanges in the House that, in spite of the considerable length of the Bennett report, it really is a matter of urgency that it be published as soon as possible, and that the period of two weeks that he mentioned is too long? I ask the Minister to convey to his right hon. Friend the very strong feeling in all parts of the House that the report ought to be published as a matter of urgency.

Mr. Concannon: I would say that it will be within the next week or two, as a maximum. We understand the urgency of this matter, and so does the RUC, whose name is being besmirched again. Very little appreciation is being expressed of the splendid work which it has been doing in the Province.

Mr. Madden: I acknowledge that there is general opposition in this House to all forms of terrorism, but will the Minister acknowledge the seriousness of the allegations made in yesterday's programme? Will he also tell the House whether his office, the RUC or the Army was given an opportunity of previewing the programme? Will he emphatically tell the House whether or not the Secretary of State was offered an opportunity of appearing in the programme? Lastly, if he has reason to object to the content of the programme, is he contemplating submitting an official complaint to the Independent Broadcasting Authority?

Mr. Concannon: Again, I can hardly stress enough that my right hon. Friend the Secretary of State did not refuse to appear in the programme yesterday. The whole thing was brought forward. I do not know that I can say any more, or that the matter gets any better for my reiterating this. There are no plans at present for doing anything that my hon. Friend has suggested. As we have said before in Northern Ireland, we are not against censorship of the media; we just wish that they would conduct themselves a bit more sensibly than they do.

Mr. Flannery: Will my right hon. Friend accept from me that for many months those of us—and there are not many—who take part in Northern Ireland Question Time and Irish debates have been receiving letters from the relatives of imprisoned people denouncing the treatment in Long Kesh? Will he also accept from me that when Opposition Members say"Everything is perfect"and when anyone else says"Everything is wrong ", the truth probably lies somewhere between the two? It would be helpful if, without rushing to say that nothing is wrong—as a spokesman for the Northern Ireland Office did—some detailed inqury were made, even though we are waiting for the Bennett report. We have waited a long time. Until these suspicions are allayed there will be widespread worry about our reputation all over the world, and not only throughout Britain.

Mr. Concannon: That is why my right hon. Friend set up the Bennett committee. That is why I say that the House should wait for the Bennett report. This has nothing to do with imprisonment in

the Maze prison. This is to do with people in police custody.

OCEAN ISLAND (SECURITY)

Sir Bernard Braine (by private notice): Sir Bernard Braine (by private notice) asked the Secretary of State for Foreign and Commonwealth Affairs if he will make a statement concerning security on Ocean Island following the breakdown of the recent talks in Fiji on the Banaban question.

The Under-Secretary of State for Foreign and Commonwealth Affairs (Mr. Evan Luard): According to the latest reports available, the security situation on Banaba is at present quiet. When I met representatives of the Banabans in Rabi and Tarawa a few days go, I expressed the hope that the expedition of 150 Banabans which was then shortly to leave for Banaba would conduct itself in the island in an orderly way. All Banabans have a right to enter Banaba whenever they wish, provided their intentions are peaceful, but I pointed out that further acts of violence would only alienate sympathy for their cause among their many well-wishers in Britain and elsewhere.

Sir B. Braine: Is the hon. Gentleman aware that his answer does not remove the anxieties that many of us feel in all quarters of the House that a tragic blunder has been committed? Will he confirm that he admitted to the Fijian Prime Minister last week that his meeting with the Banaban community on Fiji had left him in no doubt as to their determined opposition to being included in a Gilbertese republic, but that he had come out to the Pacific with no mandate to listen to their pleas for separation? Will the hon. Gentleman also confirm that, following this, the Fijian Prime Minister told his Parliament that the British Government policy over the Banabans was unfair, that it had ignored Fijian representations, that Fiji could not be insensitive to Banaban claims, and that Fiji would not be prepared to act as guarantor in future disputes between Banabans and the Gilbertese over Banaban rights on Ocean Island?
In view of the fact that the Government's manifestly clumsy and insensitive handling of this matter over a long time


has now resulted in 154 Banabans setting sail for their Ocean Island homeland vowing that they will die in defence of their own rights—and they may very shortly arrive—will the British Government, even at this late hour, reconsider their position with a view to preventing almost inevitable conflict and bloodshed?
Finally, since the Government have themselves provoked this situation, will the hon. Gentleman tell the House what additional British security forces will be sent to Ocean Island to prevent conflict between Banabans and Gilbertese, and how quickly those forces will arrive?

Mr. Luard: I do not think that the British Government have at any time concealed the fact that there exists a major difference of views between the Government of the Gilbert Islands, on the one hand, and the people of Banaba, on the other. I have certainly never concealed the fact—I did not conceal it in my interview with Mr. Ratu Mara, the Prime Minister of Fiji—that we believe that a very large proportion of the Banabans seek separation of Banaba from the Gilbert Islands.
This has not been the problem. The problem has been that the Government of the Gilbert Islands have been totally opposed to that separation. That was the situation with which we were confronted, as a result of which the British Government, in November, made a decision that the Gilbert Islands would go to independence including Banaba. Therefore, as I told Mr. Ratu Mara, my own mandate was to discuss ways of safeguarding the interests of the Banabans in a united Gilbert Islands. That I attempted to do, both in my discussions with the Banabans and in my discussions with the Fijian Government and with the Gilbert Islands Government. I believe that my visit was useful in enabling me to clarify some of these points.
The hon. Gentleman speaks about the danger of conflict and bloodshed. I suggest to him and to the Banabans, whom he has so strongly supported, that it would be unwise of the Banabans if they thought that they would promote their cause by deliberately seeking to promote conflict and violence in Banaba. I do not know that that is their aim. I hope that it is not their aim. That is why I told them myself, when I spoke to

them in Rabi and again in Tarawa, that I thought that it would be misguided of them to believe any such thing, and I expressed the hope that they would conduct themselves in an orderly way.
The hon. Gentleman asked me about the use of British security forces. I hope very much that such a thing will not be necessary.

Mr. Hooley: Is my hon. Friend aware that the Banabans are Fijian citizens and that the perverse and obtuse behaviour of Her Majesty's Government in relation to the Banabans and Ocean Island is causing trouble not only with the Banabans but with the Government of Fiji and is souring our relations with a country with which we have long had very friendly and good relations?
Is my hon. Friend also aware that responsibility for Ocean Island is a matter not for the Gilbert Islands Government but for the British Government, who are responsible for the present situation by their arbitrary act in linking Ocean Island with the Gilberts, and that the Gilbert Islands Government do not have the final responsibility in the matter? That responsibility rests with this House.

Mr. Luard: Of course I am aware that many of the Banabans are or may be Fijian citizens, although most of them are also citizens of the United Kingdom and Colonies at present. One of the matters that I discussed with Mr. Ratu Mara was citizenship matters of this kind.
My hon. Friend is right. We are concerned about our relations with Fiji. But I am glad to say that I can conclude from my quite long conversation with the Prime Minister of Fiji that I do not think that there is any danger at present that our long-term relationship with Fiji will be badly prejudiced by this particular issue, although Mr. Ratu Mara did not conceal his own opinions on this subject.
Of course I accept that this matter is at present the responsibility of the British Government. I spoke earlier about the decisions that the British Government have reached on the question. No one doubts for a moment that, until the Gilbert Islands become independent, the decisions are those of the British Government. That is precisely why I was sent to the region to try to


discuss the question. In the final resort, of course, the decisions are for this House. The House will have an opportunity in due course to express a view on the matter.
I was sent to the region particularly in order that the British Government's views should be known and so that I could discuss with the other interested parties possible compromise solutions.

Mr. Donald Stewart: Does not the Minister regard it as regrettable that, on Commonwealth Day, the Government's handling of the situation should be meeting the severe censure of the Fijian Prime Minister? In view of the orginal appalling injustice done to the Banaban people, will the Minister attempt now to get nearer to meeting their wishes in this matter?

Mr. Luard: I cannot accept that in my interview with Mr. Ratu Mara he expressed severe censure of the policy of the British Government. Even the statement issued about that meeting—a one-sided statement—did not suggest that he expressed severe censure of the British Government's policy, and it certainly was not the tone of our discussion at that time.
The hon. Gentleman talked about appalling injustice to the Banabans. I am sure that the House, if it considers the matter, will realise that the British Government were faced—as any British Government would be—with a very difficult dilemma on this issue. The question was whether we should do an injustice to the Banabans or an injustice to the people of the Gilbert Islands as a whole. The fact was that the people of the Gilbert Islands and the Government of the Gilbert Islands, whom I have seen within the last few days, have at no time concealed their very strong determination that Banaba should remain part of the Gilbert Islands.
Therefore, it was on that principle, a principle which has been adopted by successive British Governments—that it should be the will of the Government and the people of the territory as a whole that is decisive—that we decided that Banaba should not be separated from the Gilbert Islands.

Several Hon. Members: rose—

Mr. Speaker: I propose to call those hon. Members who have already risen.

Mr. Christopher Price: Is my hon. Friend aware that it may be very difficult to get the Kiribati independence Bill through the House so long as this question remains unresolved? Is he also aware that a peaceful solution is much more important that a rapid solution and the absolute adherence to deadlines? Did he explore with Ratu Mara and the Fijian Government forms of association with Fiji or Nauru as possible alternatives to the present alternatives set out in the White Paper?

Mr. Luard: My hon. Friend said that, as the matter was unresolved, we should allow further time for looking at other solutions. One of the main purposes of my visit was to consider what compromise solutions might be possible. I proposed to the various parties with whom I discussed the matter forms of self-government for the Banabans within their own island, further assurances that could be given to them that they would continue to enjoy their rights, which we have ensured should be provided for them under the independence Bill, and even the possibility of a treaty between the Gilberts and some other country which would help to ensure that those rights were protected. Those were reasonable compromises to explore. I do not believe that my journey was in vain.
I agree that we should not be too hasty about these matters. But the House knows that the Government of the Gilbert Islands have been promised that they will enjoy their independence in July this year. That is already a postponement from the date originally suggested, so I hope that we can reach a solution before then.
My hon. Friend asked about the possibility of association with Fiji, Nauru or some other territory. All these ideas have been proposed in the past. They were certainly mentioned in the course of my discussions. But I must make clear that I had a mandate. That mandate was to act in accordance with the decision that had already been reached by the British Government last November, which was that Banaba itself would remain, in some form, associated with the Gilbert Islands.

Mr. Beith: Would not the best way to prevent disorder be to restore the shattered faith of the Banaban people in the


integrity of the British Government by saying directly to the Gilbertese that we cannot associate Ocean Island with Gilbertese independence in the way they propose? Would it not be fairer to the Gilbertese people to say that we in this House do not want to delay their independence but that it is likely to be delayed if this question is inextricably bound up with it?

Mr. Luard: The hon. Gentleman and perhaps the House as a whole seem to forget that this matter has been discussed, debated and explored over several years. There have been a number of meetings between the Banabans and the Gilbertese and between them both and the British Government. There was a long discussion of the question at the Gilbert Islands independence conference in London in November. There was about a week's discussion on the matter. All sides were listened to carefully. As a result, the Government reached a decision. There is no reason to think that by delaying the matter much further it would be any easier to reach a decision. Eventually, as Ratu Mara said to me, a decision must be reached. He urged us to reach a decision quickly on the matter.

Mr. Roper: Has my hon. Friend any evidence of external interference or aid in the disturbances which have occurred recently on Ocean Island? Will he ensure that a clear distinction is made between the question of compensation for the Ocean Islanders from the British Phosphate Commission and the question of independence for the Gilbert Islands, remembering that many Members are concerned about the Gilbert Islanders as well as the Banabans?

Mr. Luard: On the first part of my hon. Friend's question relating to external influence and aid for the Banabans—

Sir Bernard Braine: The Methodist Church?

Mr. Luard: —they have decided, in their own judgment, to engage certain public relations firms and others who have been assisting them in promoting their cause. I am willing to say—it was the first answer I gave this afternoon—that most of the Banabans are sincere in their view about this matter. We have to take account of their strongly held views. My hon. Friend rightly says that the constitu-

tional question with which we have been mainly concerned in the House today is distinct from the problem of compensation for the Banabans. As the House knows, the British Government have made what we believe is a fairly generous offer to try to resolve the financial question. We accept that the important matter of the constitutional future of the Banabans is something separate which the Government and I have been exploring on a separate basis in the last week or so.

Mr. Neubert: Do not these instances of frustration arise from the Banabans' conviction that the British Government's mind has been, is, and will remain closed to their genuine grievance? Will those doubts be assuaged by the Minister's unprecedented eleventh-hour visit to the Pacific?

Mr. Luard: It would be unjustified to suggest that the British Government's mind has been closed at any time on these questions. I have already mentioned that we had a long discussion of the whole problem at the Gilbert Islands independence conference. We listened to arguments on both sides. No stone has been left unturned in exploring possible ways out of this dilemma. We have listened many times to the arguments on the question.
I accept the hon. Gentleman's remark that my visit was an attempt to go to the last limit in exploring all possible avenues and all possible means of compromise. I hope that I was putting forward some proposals that might represent a mutually acceptable compromise to try to meet positions that are almost diametrically opposed. By talking about autonomy for Banaba and about safeguards for the protection of their interests, I thought it might be possible to arrive at a solution acceptable to both parties.

Miss Joan Lestor: Does my hon. Friend agree that this is reminiscent of the Anguilla situation, when Anguilla was forced into a union that she did not want? The consequent history of that is still going on. Will my hon. Friend bear in mind that it would be far better to delay bringing forward independence for the Gilbert Islands until a solution has been found that meets the wishes of Banaba rather than putting the Government into an embarrassing position of having to


go back again on a Bill which is unlikely to get the assent of this Parliament?

Mr. Luard: My hon. Friend mentions a parallel with Anguilla. I agree that there are some parallels, but there is one major difference which the House ought to bear in mind. We have no knowledge of what is likely to be the future population of Banaba. Over the last few years only about 50 or 100 Banabans have lived in Banaba. The great majority of the total population of 2,400 Banabans have lived in Fiji. In considering whether Banaba should be separated or remain part of the Gilbert Islands, we have to take account of the fact that it looks as if the future population will be very small—perhaps 100 or 200—and very much smaller than the population of Anguilla.
My hon. Friend also said that it would be worth delaying the independence of the Gilbert Islands in order to explore this matter further. This view can be expressed and I will report it to my colleagues in the Government. But we have discussed this issue for three or four years in many different forms. My hon. Friend knows that herself because she was concerned with the issue at one time. We could hardly have done more to listen to many expressions of views. We have tried to explore all possible compromise solutions that we could devise. That was the reason for my recent visit.

Mr. Luce: The tense situation on Ocean Island arises from the anxiety of the Banabans about their rights on that island. I acknowledge that the Minister, I understand, has paid a fresh visit to the Pacific area in the light of strong representations from this side of the House which arose from the comprehensive and forceful case put by my hon. Friend the Member for Essex, South-East (Sir B.

Braine),leading the campaign for justice for the Banabans—an all-party campaign—which reflects the genuine anxieties of the Banabans.
Will the Minister make a full and complete statement as soon as possible about the mission that he has recently made to the Pacific and before the Second Reading of the Bill in this House so that hon. Members may assess the situation carefully? While we on this side of the House genuinely wish to see the aspiration of friends in the Gilbert Islands fully succeeding, namely, that they proceed to independence, we also believe that the British Government should give the highest priority to ensuring that the genuine anxieties of the Banabans are allayed.

Mr. Luard: The hon. Member asked me about making a statement. I got back only this morning from a fairly long visit to the area and I have spent most of the morning dictating my own report to the Government about my visit. That report will have to be considered, and then no doubt a statement will be made to the House and to the other place about the Government's conclusions as a result of my visit.
Secondly, the hon. Gentleman said that we should give the highest priority to considering the apprehensions of the Banabans. I repeat that we fully recognise their concern. It was precisely because of our recognition of their strong feelings on this subject that the Government decided to send me to the area to see whether I could explore some compromise acceptable to all parties. Because, as I have said, the views of both major parties are diametrically opposed, it is very difficult, but I hope that in my report I shall be able to suggest one or two ways which might go some way to alleviating the difficulties.

EUROPEAN COMMUNITIES (DRAFT ORDER)

Mr. Speaker: Last Thursday, the hon. Member for Swindon (Mr. Stoddart) raised with me the matter of the Draft European Communities (Definition of Treaties) (ECSC Decision on Supplementary Revenues) Order 1979. He suggested that the implications of the order were such as to it make its discussion and approval by another place a breach of the privileges of this House. I undertook to rule on the point that he raised.
As the House knows, the draft order seeks to give effect to a decision of the Governments and the member States of the European Coal and Steel Community allocating to that Community additional contributions for the financial year 1978. Among those contributions is one from the United Kingdom.
I have examined the matter with care since the hon. Gentleman raised it and I have two observations to make. In the first place, section 1(3) of the European Communities Act 1972 provides that draft orders of this type, defining certain Community treaties as treaties within the meaning of the Act, shall be subject to approval by resolution of each House of Parliament. Indeed, section 2(3) of that Act expressly envisages a charge arising from an obligation under a treaty approved in that way.
Secondly, in his submission to me last Thursday the hon. Member said that there was a tradition that the other House should in no circumstances grant or refuse Supply. However, I have to say that all Appropriation, Consolidated Fund or Finance Bills pass through normal statutory procedures and so are considered by another place.
As for statutory instruments, their procedures are governed by the Acts under which they are made. If, as in this case, the parent Act provides that the instrument requires approval by both Houses or is subject to annulment by either House, that is the procedure that must be followed.
In the circumstances, I do not find that this is an issue that touches on the privileges of the House. However, I congratulate the hon. Member on being so keen to guard our rights and privileges.

Mr. Stoddart: On a point of order, Mr. Speaker, I thank you for that ruling, which I must confess I somewhat expected. I think that it shows that the House must be careful about legislation. When it passes a parent Act, it must ensure that it understands exactly what the implications are. I am not sure that when we passed the European Communities Act in 1972, after the imposition of a severe guillotine, we knew exactly what the implications were.
You said, Mr. Speaker, that there were ample precedents for this and that this statutory instrument is no different from many others that grant Supply. Nevertheless, is it not the case that even though the Finance Bill is discussed by the other place, it cannot refuse Supply? Is it true that if it refuses to pass this order the Supply could not be made? The answer to that question would be interesting.
Perhaps the Lord President, who is present, would like to consider my second point. The amount involved here is £3·25 million. Are we to suppose that at some future date perhaps £30 million or £60 million will have to go through the same procedure, thus giving the House of Lords the right of refusal of Supply to a significant degree? The Lord President should consider this and perhaps make a statement.

Mr. Speaker: The point of order was addressed to me and not to the Lord President—who no doubt is counting his blessings.
The hon. Gentleman has raised two interesting questions, but they are hypothetical. By long tradition, no Speaker of the House ever rules on or answers hypothetical questions. We should get into too much trouble if we did so.

Mr. Spearing: Further to the point of order, Mr. Speaker. May I make a point that may be for you? If it is not, I hope that the Lord President will reply to it on Friday evening, when there is an Adjournment debate touching on this issue. You said that the European Communities Act contained a section that made provision for making a charge upon the Consolidated Fund under a statutory instrument laid under section 1(3). Is it unique that a statutory instrument of itself becomes the means of paying


money out of the Consolidated Fund and therefore under the Appropriation Act?

Mr. Speaker: I can tell the hon. Gentleman that this is not a precedent—that there have been other occasions when statutory instruments involving expenditure have been subject to proceedings in both Houses. There were the Hill Farming Act 1946 and the Agriculture Act 1967, both of which made provision for statutory instruments to go before both Houses.

Mr. Hooley: Further to the point of order, Mr. Speaker. I take your point that Consolidated Fund and other Bills go to the other place, but I think that I am right in saying that the other place has no power to reject them. If that is correct, is it the case that although this order may have to go before the other place, the other place cannot negative it?

Mr. Speaker: All I know is that it has to go before the other place; we shall find out afterwards what happens to it. I really do not know any more than that at the moment.

" WEEKEND WORLD"TELEVISION PROGRAMME

Mr. Craig: I beg to ask leave to move the Adjournment of the House, under Standing Order No. 9, for the purpose of discussing a specific, urgent and important matter, namely,
 the television programme yesterday known as ' Weekend World ', which, because of inaccuracies, distortions, biased opinions and uncorroborated and untested statements making serious allegations of dereliction of or failure in duty, in the total absence of balance as required by statute, must bring into disrepute the law in Northern Ireland and its enforcement by undermining the integrity and the authority of the judiciary, the police and the Army, as well as encouraging terrorist prisoners convicted of serious crimes to defy the prison authorities and giving aid and comfort to the terrorists of the Provisional IRA, an illegal organisation.
Those are strong words, but I propose to stand by each and every one of them. I have in my possession an advance press release from London Weekend Television. It claims, amongst other things, that the programme was the result of six months' research into the whole operation of the law in the Province, and it comes only days before the expected publication of a report by the Bennett committee. The programme was badly researched and lacked the balance required by the statute. There appears to be a belief that if there are Protestants and Catholics on a programme it is balanced, regardless of the substance of what they say.

Mr. Speaker: Order. I am sorry to interrupt the right hon. Gentleman. I want him to advance his case, but I shall be grateful if he will state his reasons why these things should be discussed in an emergency debate.

Mr. Craig: I was coming to that, Mr. Speaker. The programme cast serious aspersions not only on the judges of Northern Ireland but on the entire legal system. It cast aspersions on the police and the Army. In the difficult situation in Northern Ireland, that can have dreadful consequences. It is important that those misleading and erroneous statements should be corrected before there are sad consequences in our Province.
There were many disastrous allegations that were inadequately researched. The centrepiece was the so-called evidence


given by a police surgeon, Dr. Robert Irwin, who manifestly failed to convince anyone that he was speaking with real authority. He alleged that between 150 and 160 cases that he personally examined involved brutality. But he did not indicate—nor was he asked to do so—that he had performed his statutory duty in reporting what he found. Indeed, we know from the Minister today that he did not report anything like 150 or 160 cases. We shall no doubt have more accurate information as the police investigation continues.
Dr. Irwin went on to say with remarkable carelessness, if nothing worse, that he had seen five cases of punctured eardrums. The advance press release states that ruptured eardrums are one of the most serious injuries and could not possibly be self-inflicted. Neither you nor I, Mr. Speaker, have medical qualifications, but many of us have had ear troubles and ruptured eardrums. Ruptured eardrums can be a self-inflicted injury. Anyone who has brought up children knows that there is a danger of their sticking things in their ears. Those who have served in the Royal Air Force and suffered ruptured eardrums will know that by holding the nostrils and blowing hard the rupture can recur. What the doctor was saying was manifestly not true.

Mr. Speaker: Order. Again I regret interrupting the right hon. Gentleman, but he must not make the speech that he would make if I had granted the application for an emergency debate. He should be making out a case for an emergency debate.

Mr. Craig: I apologise, Mr. Speaker, if I have been over-zealous in proving the vast scope of the programme and the harm that it has done, but I have a duty to stand by what I say. There are other examples of what I can only conclude to be a deliberate bias by the producers. People were asked to give their views on confessions. One of them said that the Northern Ireland (Emergency Provisions) Act has provided a legislative mandate to allow the police to obtain confessions at a standard lower than that in Britain. A natural effect of that is that they will apply extra pressure to obtain a confession. I gave a filmed interview for the programme on the law as I saw it.

Mr. Speaker: Order. The House is getting restless. The right hon. Gentleman

is answering yesterday's television interview, which is what he would do if we had an emergency debate. He must advance arguments about the serious consequences if we do not have such a debate, if I may put words into the right hon. Gentleman's mouth.

Mr. Craig: I bow to your guidance, Mr. Speaker. But my filmed interview was excluded and it was the only evidence contrary to the weight of that programme. That alone should show the lack of balance. The producers had notice of a different view on the law as to confessions and the allegations made about the deficiencies in a trial without a jury.
When one is dealing with the difficult and dangerous situation in Northern Ireland, it is highly irresponsible to cast aspersions on Her Majesty's judges because they are jaded and tired, on the police, and on the Army, and to do so only a matter of days before a judge reports on an investigation. The House should consider the serious consequences of yesterday's programme.

Mr. Speaker: The right hon. Gentleman gave me notice before 12 o'clock that he would seek leave to move the Adjournment of the House for the purpose of discussing a specific and important matter that he believes should have urgent consideration, namely,
 the serious allegations made in the television programme ' Weekend World ' which brings into disrepute the law in Northern Ireland.
I listened carefully to the right hon. Gentleman and also to the exchanges in the House earlier this afternoon. I have no doubt about the importance of the matters raised by the right hon. Gentleman, but I have to take account of several factors set out in Standing Order No. 9 and I am required to give no reasons for my decision. I listened carefully to what the right hon. Gentleman said, but I rule that his submission does not fall within the provisions of the Standing Order. I cannot therefore submit his application to the House.

STATUTORY INSTRUMENTS, &c.

Ordered,

That the draft North of Scotland Hydro-Electric Board (Compensation for Smelter Deficits) Order 1979 be referred to a Standing Committee on Statutory Instruments, &c.—Mr. Joseph Dean]

BUSINESS OF THE HOUSE

Ordered,

That the Local Government Finance Bill may be proceeded with at this day's sitting, though opposed, until any hour.—[[Mr. Jim Marshall.]

LOCAL GOVERNMENT GRANTS (ETHNIC GROUPS) [MONEY]

Queen's Recommendation having been signified—

Resolved,

That for the purposes of any Act of the present Session to authorise the payment to local authorities in Great Britain of grants towards expenditure attributable to the presence of ethnic groups within their areas, it is expedient to authorise payment thereof to be made out of money provided by Parliament.—[Mr. Jim Marshall.]

LOCAL GOVERNMENT FINANCE BILL

Order for Second Reading read.

10.13 p.m.

The Under-Secretary of State for the Environment (Mr. Guy Barnett): I beg to move, That the Bill be now read a Second time.
No one likes taxes, not even Members of Parliament who authorise them, but there can be no public services without revenues. The services of local government, which are of inestimable value to us but which we take so much for granted, could not exist without the combination of local taxation and support from national revenues. Any tax system must be kept under scrutiny and kept up to date. This Bill is designed to make a number of modest improvements to the system of rating and Exchequer aid to local authorities.
In the opening months of this Administration, Tony Crosland, then Secretary of State for the Environment, appointed the Layfield committee on local government finance. Its terms of reference were
 to review the whole system of local government finance in England, Scotland and Wales, and to make recommendations ".
The committee reported, after two years of intense work, in May 1976, and its report is one that will be actively referred to for many years. Out of this work and from parallel initiatives have come several important developments in local government finance.
After receiving the Layfield report, and following full consideration of its recommendations in the consultative council on local government finance and elsewhere, the Government published the Green Paper on local government finance. This proposed important developments in rating, central Government grants, local authority capital expenditure and audit arrangements.
The Bill is concerned mainly with the rating proposals contained in the Green Paper. It also contains some minor proposals for changes and improvements in the grant system and for relaxation of central controls over the level of various fees and charges levied by local authorities.
The Government recognise that rates are not a popular tax, and alternatives were examined extensively by Layfield and then in the Green Paper. Many people hoped that rates—or at least domestic rates—could be swept away. They hoped that Layfield could find the philosopher's stone—the tax that no one would mind paying—but it could not be found and the committee of inquiry advised that the rating system should continue, with some modifications.
It is interesting and instructive to compare the exhaustive analysis and recommendations of the Layfield committee with the Conservative Party's occasional forays into rating. At the time of the October 1974 election the Opposition wanted simply to abolish domestic rating. Subsequently, however, this vision seems to have receded somewhat from their pronouncements.
I was particularly interested to see reports of the speech last October by the hon. Member for Barkston Ash (Mr. Alison) when he spoke of abolishing the burden of domestic rates rather than the rates themselves, though I was somewhat puzzled to see that he proposed to achieve this by abolishing domestic rate relief, thus increasing the absolute level of rates, and then setting them off against income tax. I shall be waiting with absorbed interest to see what panacea he has to offer us tonight.
Returning, however, from those visionary realms, I suggest that any serious examination of the rating system must now start from the rigorous analysis of the Layfield report. The Layfield committee found that rates have many advantages as a local tax. The tax structure is reasonably simple. The yield is predictable. Rates are easy to adminster locally, cheap to collect and difficult to evade. Because rates are levied on immovable property, they are ideally suited as a local tax; and their very perceptibility heightens the accountability of local government. We see this every year as authorities make their rates in the full glare of local publicity and debate. No other potential source of local revenue has such a combination of advantages.
On the other hand, the rating system was acknowledged to have defects. What tax system, I may ask, does not? It is the


duty of responsible Government to build upon the good features of rating, to identify the weak points and to work to improve the system. This Government propose to do just that. I would state our underlying objective as to make the rating system more intelligible and more fair.
I draw attention now to six main ways in which we can work to improve the rating system, and in which this Bill will help significantly. These are: first, improving the rate rebate system so as to moderate the apparent regressivity of the rating system; second, improving the instalment system, so that all ratepayers can plan for regular payments of reasonable instalments of rates instead of substantial lump sums; third, improving the valuation system so as to ensure that the basis of assessment for rates is as fair and equitable as between one ratepayer and another as we can make it; fourth, improving the accountability of the system so that all ratepayers know what their rates are being raised for and how they are being spent; fifth, improving the administration of the system so that local authorities are able to operate it as fairly and efficiently as possible; and, finally, improving the grant system, with its general objective of taking a substantial part of the burden of local services off the ratepayer's shoulders and equalising the burden of different needs and different resources in different parts of the country.
I do not propose to go through the Bill clause by clause, but I should like to say a little about how it will improve matters under each of the six main heads I have just outlined.
One of the most common criticisms of the rating system is that rates bear little relationship to the ability to pay—that they are a regressive tax. One of the chief routes by which we can help, therefore, is by the development of the rate rebate system. Some 4 million households are eligible for rate rebates in England and Wales. With this scale of provision, rebates are not just a benefit for those who are poor: in essence, rebates form a system of tax allowances.
Take-up is not complete—around three-quarters of those eligible. Among pensioners it is around 90 per cent., but

I am particularly anxious to improve take-up among tenants in the private rented sector, by whom evidence suggests take-up is well down. I hope to launch special publicity this year to attract applications from private tenants.
The Bill contains an important provision to extend the range of rate rebates. At present, when a wife has separated from her husband and lives alone in the matrimonial home she cannot obtain a rate rebate, even though she is paying the rates. Clause 18 will extend eligibility to separated wives in these circumstances. Incidentally, the clause is not discriminatory. It will also work the other way, so that the husband would be eligible if he were the one left living in the matrimonial home.
The second route for improving the system is by easing the payment arrangements. The rate demand is made at the beginning of the year but instalments can spread payments over 10 months or so. Domestic ratepayers already have a legal right to pay by instalments—and I recommend people who may not have been aware of this right to consider exercising it.
It is unreasonable that businesses and other non-domestic ratepayers should not have that opportunity also, and clause 4 of the Bill will therefore establish this right for all ratepayers in England and Wales. The right has already been established in Scotland. Here is a notable provision that should be of very considerable benefit especially to small businesses.

Mr. Max Madden: Is my hon. Friend aware of the arrangement made by the Tory-controlled Calderdale district council in my district whereby it has introduced a system which separates rent payments from rate payments made by council tenants? This scheme seems extremely expensive, as it is costing all ratepayers—council and private tenants—an additional sum of about £50,000 a year to administer. Will the Bill safeguard this undesirable trend, which may well be adopted by other Tory-controlled authorities?

Mr. Barnett: The Bill will not deal with the particular point raised by my hon. Friend the Member for Sowerby (Mr. Madden). He will understand if I do not make any comment on it. Whatever a Tory council may do in any part


of the country, I prefer to leave it to the judgment of the electors of the authority concerned rather than attempt to pass judgment on it myself.
Incidentally, I was interested to see that in his Bournemouth speech the hon. Member for Barkston Ash put forward the idea of instalments for small businesses and other non-domestic ratepayers as an important Conservative proposal, apparently oblivious of the fact that it had already been recommended by Layfield and included in the Government's Green Paper.
I turn now to valuation. We can do much to make rating fairer and more intelligible by keeping the valuation of premises up to date and realistic. Regular general revaluations are the key to this. The revaluation due in 1978 was postponed to give time to the Layfield committee to conduct its inquiry and for its recommendations to be studied. A general revaluation is now firmly pro grammed for 1982, and the valuation office of the Inland Revenue is already advanced with its preliminary work.
What we need for the future is a system that will enable us to have regular revaluations at five-yearly intervals. There are many reasons why this has proved impossible in the past, but one of the most important has been the burden of the sheer volume of appeals against valuation assessments that come in all the time and which have often made it impossible for the valuation office to prepare for the next revaluation as quickly as it and everyone else would have wished.
No one, of course, wants to prevent ratepayers from having their right to challenge the rateable value assessment that is put on their property at a revaluation or to propose changes when any significant or material changes take place in the property or its environment.

Mr. Arthur Jones: It has been a political decision on the part of Socialist Administrations that revaluations should not be made. In fact, we have not had a revaluation at any time since the war under a Socialist Administration. It was the late Richard Crossman who disclosed that it was a political decision which he took which persuaded the Government not to have a revaluation for rating purposes when he was Secretary of State.

Mr. Barnett: The hon. Gentleman will know that some years ago legislation was passed through this House, during the lifetime of the present Administration, to delay the revaluation quite deliberately in order to make it possible, as I have just said, for the Layfield committee to report. That was done with the agreement of the House, and that was the reason why it was done on that occasion. I can make no comment on what the hon. Gentleman said. Naturally, I accept that it is unfortunate that revaluation has been delayed for so long, but I think that there was a very good reason why it was done on that occasion and why the revaluation was delayed until 1982.
The Layfield committee thought, and the Government agree, that it would be reasonable to try to reduce the number of appeals coming forward for essentially irrelevant reasons, such as rises in rate poundages, which have nothing to do with valuation but which clog up the system and themselves make it harder to achieve the five-yearly revaluations which everyone wants.
After carefully considering this problem, the Layfield committee said—and I should like to quote its exact words:
 We consider that it would be justifiable to limit the ratepayer's right to make a proposal beyond the first year following revaluation to cases where there had been a material change of circumstances affecting value, or a change of occupier. This procedure, which obtains in Scotland, should discourage appeals stimulated by rate poundages increases without depriving anyone of a legitimate opportunity to test the validity of his assessment ".
That quotation comes from page 176 of the report. The Government have accepted this advice, and clauses 7 and 8 of the Bill broadly adopt the Layfield position.
We said in our Green Paper that we believe that
 these changes strike a fair balance between the rights of the individual and the need to ensure the efficient operation of the rating system ",
and we had very little adverse reaction. Two related clauses—Nos. 6 and 9—also follow through on Layfield recommendations to modify the appeals system in the interests of the majority.
Naturally, the House will want to consider the implications of these proposals very carefully, but I would say that this. As a ratepayer myself, I do not feel


that my rights will be dimnished by these four provisions. After each revaluation I shall have a full year to consider whether the new value of my property seems fair, and to appeal against it if not. After that, I shall be time-barred. However, if any significant change happens to my property or my environment which might affect its value, I shall still be entitled to appeal. Further, I shall know that in any case, as a result of the restriction imposed on me along with every other ratepayer, it will be possible to have another revaluation in five years' time, when the whole question can be reopened.

Mr. Stephen Ross: It has not been unknown for valuation officers to make mistakes in measurements of area or in pricing. If that occurs and it is shown to have occurred after the year has expired, will there be grounds for an appeal against mistaken quantum or area of propertly that brings a value that is too high or, in some cases, too low? Will there be provision for such a challenge, or will it be up to the valuation officer or local authority to make the alteration?

Mr. Barnett: The probability is"Yes ". That is a matter that we may examine in Committee to ensure that the hon. Gentleman's point, which seems perfectly fair, is covered.

Mr. Nicholas Winterton: Is the new valuation likely to be based on the old valuation, bearing in mind that inflation is likely to continue, or is the job to be as massive as I expect it could be and to involve many areas being totally revalued? There is no doubt that valuations in some areas are far too high rather than far too low. Is there to be a balance between rates increasing as a result of revaluation and perhaps rates decreasing in other areas?

Mr. Barnett: I do not think that it would be right for me even to try to make a judgment on decisions that will be reached following the revaluation exercise. Unfortunately, the system that we shall have to use is that which was used on the previous revaluation, much as we would like to go ahead with capital valuation. However, that is another matter.

Mr. Andrew F. Bennett: What will be the position if, for example, six people living in a road appeal against a valuation and the appeal takes some time to be heard, and after 12 months have elapsed the appeal is upheld? What will happen if some of their neighbours think"We, too, are entitled to a reduction "? If that happened, would the neighbours be entitled to appeal? That type of chain reaction took place on many occasions following the previous revaluation. Will the chain reaction be possible, or will everybody have to start at the beginning?

Mr. Barnett: If they are out of time, they are out of time. If they have not appealed within the year if the Bill is enacted, it will not be possible to appeal. That, again, is a matter that we shall wish to examine in Committee to ensure that my hon. Friend's point is considered. I am grateful to him for mentioning it, as it could be an important issue that we shall want to consider.
Three other clauses are intended to improve the system of valuation. Clauses 1 and 2 are about methods of valuation and will be welcome to the profession. Clause 10, on minor structural alterations, will remove an anomaly that has been resented by many householders. There are one or two other technical matters of valuation that the Government might wish to introduce in Committee.
We believe it necessary to introduce valuation on the basis of capital values rather than on the basis of historic, not to say antiquated, rental assessment, which is becoming increasingly difficult to work upon. The Government have been prevented from making this sensible reform, but it is our desire to make it.
I turn to the issue of accountability. There are two other routes of improvement in the system which I shall cover quickly. One is to strengthen the accountability of local government to its electorate. Clause 15, in a minor way, will help to make councils' rate-making more explicit by requiring them to identify and declare separately the rate needed for the county and for the district.
Secondly, we can help local authorities to administer the system more fairly and more efficiently. The Bill contains several minor provisions that have originated in consultation with local authorities for


improving and streamlining the rating system.
I turn now to the grant system, which itself does such a lot to redress the uneven burdens to which the rating system by itself would give rise. I draw attention, first, to the sheer size of the grant—£8½ billion in 1979–80, or 61 per cent. of total relevant expenditure, which is borne by the taxpayer rather than the ratepayer.
Secondly, I draw attention to the grant's important equalising effect in channelling Exchequer aid to areas that are poorer and where there is a greater need for local services. Thirdly, I draw attention to the important part of the grant represented by the domestic element, which goes to reduce the rates of every domestic ratepayer. Nearly £700 million next year will be used to reduce domestic rate poundages.
The Bill will extend this domestic rate relief in two ways. Clause 3 will bring domestic garages, parking spaces and storage space fully into the net. At present, if these are separate from the main hereditament, the rates paid on them will not attract domestic rate relief. Therefore, the Bill will bring a marginal benefit to some people, such as flat-dwellers with garages in a separate block, and so remove an unfairness.
More significant, however, is the extension of domestic rate relief to many mixed business and domestic premises which at present do not qualify. Domestic relief is available currently only where the domestic portion accounts for at least half the rateable value. Layfield identifies this anomaly, and clause 3 provides that where the proportion of total rateable value attributable to the private dwelling is not greater than one-half but more than one-quarter of the total rateable value, one-quarter of domestic rate relief will be given. And where the proportion is not greater than one-quarter but more than one-eighth, one-eighth of relief should be allowed. I expect this measure to be a great benefit to large numbers of small businesses, typically the shop with a flat over it, but also to some sub-post offices, private dairies, small workshops and some small businesses with an office in the home, and many others.
The remaining clauses largely concern grants to local authorities. They are non-contentious, technical provisions that have the full support of the local authority associations. I have no doubt that we shall want to look at these carefully in Committee.
In conclusion I should like to say a word about the general level of rates and local authority expenditure.

Mr. Stan Crowther: Before we leave the question of grants, will my hon. Friend assure us that the provisions set out in clause 19 on the resources element of the rate support grant, and the right of the Secretary of State to vary it, will not in any circumstances result in any local authority being told in mid-year that the resources element that it expected at the beginning of the year will be reduced? This is not clear at present.

Mr. Barnett: It might be a good idea if I were to ask my hon. Friend who will reply to this debate to confirm what I am about to say. My understanding of the situation is that clauses 19 and 20 will have the effect of improving the situation, rather than the other way. They will enable a local authority to be more certain than it is at present of precisely what resources element it will be entitled to in a financial year. I hope that that gives some reassurance to my hon. Friend.
I was referring to the general level of rates and local authority expenditure. In spite of the regular attacks that are made on the level of rates and the burden of the rating system, the House should note that over the years they have remained at a very steady percentage of the personal disposable income of individuals. Since the early 1960s, the percentage has remained very steady with just over 2 per cent. of personal disposable income going on rates. Local authority expenditure did, of course, grow substantially as a percentage of gross national expenditure in the 'sixties and early 'seventies, but in the past five years it has stabilised around a fairly steady 11 per cent. of GNP. We need to bear these fairly steady figures and trends very much in mind in considering the burden of rates and local authority expenditure.
I shall not be surprised if we hear something this evening about the supposed


scandal of enormous rate rises currently coming through for the current year and attacks on local authority expenditure run wild. Let us keep a sense of proportion about this. The Chartered Institute of Public Finance and Accountancy is reported today as predicting average domestic rate rises of about 17·5 per cent. this year. We do not know yet whether the final figures will confirm that, but I think it may well be of that order.
That is certainly higher than the single-figure increase which we had hoped for when my right hon. Friend made the rate support grant settlement last November. It no doubt reflects the cautious view which many local authority treasurers are taking about the likely level of inflation in view of recent pay increases.
There is no evidence, however, that on a national scale there is likely to be any upsurge in the total volume of local authority expenditure this year. We certainly should not allow one or two well-publicised examples of large rate increases this year to rush us into thinking that much more radical measures are needed to transform the rating system or to subject local authority expenditure to tighter central control. Such ideas may sound attractive as off-the-cuff responses to the reports of large rate increases, but they could easily do immense harm to the freedom and autonomy of local government. The longer-term perspective which I have given shows that such measures are unnecessary and would be quite unjustified in terms of overall public expenditure control.
In conclusion, I say that this measure offers a realistic approach to rating and local government finance. The Government prefer not to waste their efforts looking for the elusive tax that no one will mind paying. They prefer not to mislead the public into thinking that this is possible but, instead, to build upon the basis that we have—that is, the well-tried and practicable system of rating. It must be significant that almost every nation in the developed world has found it sensible to include a property tax among its variety of taxes. Our aim must be steadily to improve the system and make it more intelligible and more fair. I believe that the Bill will help in that process.

10.43 p.m.

Mr. Michael Alison: The Minister, in presenting and elucidating the Bill, has not sought to persuade the House that we are here dealing exactly with an epoch-making piece of legislation and reform. He said that it contains modest improvements in the rating system, and it certainly is a mouse rather than a mountain. But it contains some controversial proposals nevertheless, as well as some features that we positively welcome.
The first comment to which the Bill gives rise is a general one. It relates to what the Minister said about the Green Paper published in May 1977. That it has taken the Government nearly two years to produce this measure, containing so little of the expectations raised by the Green Paper, is an indication of the essential hesitancy and uncertainty of the Government in their general field of policy concerned with local government.
What has happened to the brave new world of changes and innovations outlined in the Green Paper—capital values for the purposes of rateable valuation; a unitary system of grant to replace rate support grant; greater freedom for local authorities in the matter of capital expenditure; a new audit system to advise local authorities, and the fruits of a general review of charging policy? All these are in the Green Paper. Why is there nothing about them in the Bill? Why has the Minister not even referred to these fundamentally innovating proposals that were discussed and considered in the Green Paper?
As for capital valuation, perhaps the Government have recognised that the volatility and changeability of house prices would inject greater uncertainty and controversy into rating valuations than under the present system. Or perhaps the absence of these proposals from the Bill before us is evidence of a certain lack of political enthusiasm on the part of the Minister's colleagues in the Parliamentary Labour Party for capital valuations. At any rate, perhaps the Under-Secretary of State will say in reply whether this omission betokens the long-term abandonment of the Government's support for capital values—we really need to know about this—or whether this omission is occasioned simply by the


difficulty of getting a majority for a change of this kind at present. It is of general public interest to know whether the Government have reneged on their support for capital valuations in the Green Paper.

Mr. Nicholas Winterton: Does my hon. Friend agree that when answering an intervention of mine, the Minister appeared to imply that the Government were in favour of capital valuation, almost strongly in favour of it, but felt that they could not get it through the House? Will my hon. Friend comment on the fact that this sort of rating taxation would probably be terribly damaging to the countryside and would further depopulate many areas where the Government wish to see an increase in growth rather than a decrease?

Mr. Alison: I am filled with a great many misgivings about the idea of capital valuations as the basis for valuing property, particularly domestic property, and I appreciate a great many of the points my hon. Friend makes about the impact that they are likely to have, but we are not responsible for legislating on this subject at present. It is of general public interest to know what the Government propose to do and whether they are simply dodging the issue because there is no majority for it, or whether it remains their long-term policy. After all, this is meant to be a Bill to implement the Green Paper. The Minister made some claim to merit in that direction.
There is something in the Bill concerning the rate support grant, but I was unable to find any reference to a unitary grant. Once again, will the Minister tell us whether he and his colleagues now believe that it is unworkable, or is it the case that such an innovation would again be unpalatable to some of the local government barons belonging to the Labour Party?
The Opposition very much regret that the Minister and his colleagues have been unable to include more in the Bill to increase the freedom of local authorities by relaxing detailed control on capital expenditure and by freeing local authorities from more of the irksome limitations imposed over the regulation of charges. The Under-Secretary, like his ministerial colleagues, must know of the definitive list of 1,250 separate ministerial controls

over local government which my right hon. Friend the Member for Worcester (Mr. Walker), when Secretary of State, caused to be prepared in the Department before he left. Why is there nothing in the Bill to start sweeping away this jungle of irrelevant controls if the Minister really believes in strengthening local government?
We also regret that it has not been possible to work towards establishing an audit system which would assist local authorities in the improvement of efficiency. With the very necessary review of output and manning levels in local government, which we understand from the Prime Minister is to form part of the study of pay comparisons by the Clegg Commission, this efficiency audit—if the Government had done something about it in the Bill—would have been welcomed not only on the Opposition Benches but in local authorities generally, especially where Conservative-controlled councils in particular are anxious to reduce waste. But, again, there is nothing about it in the Bill, although the Green Paper featured it.
In a defensive way, the Minister anticipated some reference to the burden of rate increases, which, in spite of the help which parts of the Bill might give to some ratepayers in some circumstances in the future, is bound to fall heavily on all categories of ratepayers in 1979–80. Therefore, I rise to the bait dangled in front of me. I simply ask the Minister to answer specifically this simple question. When will DOE circular No. 6/79—the definitive 1979–80 rate support grant circular sent to all local authorities in a typescript version, dated 5 January 1979—be withdrawn and replaced by another one?
The current circular, No. 6/79, states, amongst other things, that the Government's policy in relation to this year's settlement
 is compatible with the national average domestic rate increase remaining in single figures.… It is assumed that settlements in this round will be in accordance with the Government's pay policy as set out in Cmnd. 7293.
That Command Paper is the 5 per cent. pay policy Command Paper.
That is the current official guidance given to local government. When will the Government withdraw that circular and replace it by another? The proposition that rates will be left in single


figures and that rate settlements will be in accordance with the 5 per cent. pay policy have been left as high and dry as Noah's Ark on Mount Ararat and just as out of date. When will Ministers face the facts on likely rate increases and give advice and guidance accordingly? This is what we want to know. It is the advice and guidance which local authorities need.
The Minister, in presenting the Bill, said that expenditure was not likely to go up except in a few highly publicised, specific and special individual cases. Let me remind the Under-Secretary, who, I hope, will comment on this matter, what the Secretary of State for the Environment said in the House on 14 December. Referring to the current settlement, he said:
 The settlement provides for local authority expenditure to grow…Certainly the period of national manpower cuts in local government is over."—[Official Report, 14 December 1978; Vol. 960, c. 1053.]
That was not referring to a few individual local authorities.
The Secretary of State said that local authority expenditure would grow and that he expected manpower cuts to be reversed. Can this still represent official thinking? The Association of District Councils estimates—I am happy to go along with what the Minister said—that rate increases in 1979–80 will range from 7 per cent. to as high as 35 per cent., averaging out at about 18 per cent. That is double the highest figure envisaged by Ministers and, therefore, double the figure envisaged in the current circular guiding local authorities on their policy for the future. That circular must be withdrawn and a new one issued. I hope that the Minister will say when that is to happen. This is the guidance on which local authorities are making their rates. It contains a figure for cash limits on an entirely unrealistic basis. If local authorities are to make realistic rates this year, they must have realistic guidance from the Government.
I want to look briefly—the Minister himself was commendably brief—at one or two provisions of the Bill. I do not intend to refer to every clause. Much of the Bill is to be welcomed, but some clauses give us cause for great concern. I understand that it is the Government's intention in clause 1 to alter the basis of valuation of non-domestic property from gross to net annual value. It is not clear

what the effect will be on the relative incidence of the rate burdens as between domestic and non-domestic property. Can the Under-Secretary give the House some indication of the effect on household rates of this new basis of valuation? Will he also explain why the change is being made only for non-domestic property, leaving domestic rates based on gross value, subject to statutory deductions? Would it not be simpler and more equitable to base all rateable values on net rental values?
Clause 3 will be generally welcomed, not least on this side of the House, particularly by my hon. Friend the Member for Norfolk, South (Mr. MacGregor). We have been committed for a long time to the extension of domestic rate relief to a larger number of people living in mixed hereditaments, such as shopkeepers and others living at their places of business. The 1975 Bill of my hon. Friend the Member for Norfolk, South even anticipated Layfield, let alone the Green Paper. He tried in that Bill to achieve exactly that.

Mr. Madden: The hon. Gentleman has heaped a torrent of questions on Ministers about the Bill and the continuation of the rating system. He has so far neatly avoided the questions my hon. Friend put to him in opening the debate concerning the Opposition's view of the rating system. Will he now say whether the Conservative Party has abandoned its apparent commitment at the last general election to the abolition of the rating system?

Mr. Alison: If the hon. Gentleman really wants me, at five minutes to 11, to enter into a disquisition on the Tory Party's proposals for rating reform. I shall seriously consider it, but I do not think that my hon. Friends would be particularly pleased. There will be an election before long, and we shall be happy to put our proposals before the electors. That might be more satisfactory, so that they can evaluate what they think is worth while. This, however, is a Government Bill.
Can the Minister say whether the extensions proposed in clause 3 will cover virtually all those living in mixed hereditaments and how many people will still not benefit? Will he also deal with an alleged administrative difficulty, which is


that local authorities will now have to handle five, rather than three, different poundages? I take it from the explanatory and financial memorandum that the implications for local government staffing will be neutral, because there will not be any extra staffing.
We also welcome clause 4, which extends to all ratepayers the right to pay rates by instalments. This again has been Conservative policy since 1975 and featured in the Private Member's Bill of my hon. Friend the Member for Norfolk, South. Labour Members will no doubt recall why those proposals failed to make progress and recognise why we have had to wait until 1979 for the Government to do anything about them. The Government are catching up slowly, and it is probably only because an election is coming that they have bothered to do anything.
Clause 6 gives the Secretary of State power to alter by order the amount of a rate increase due to a new valuation which may be withheld by the ratepayer. At present, the ratepayer can withhold half the increase pending the result of an appeal. The proposed change is open to criticism because revaluations are infrequent, particularly under Labour Governments—my hon. Friend the Member for Daventry (Mr. Jones) made this dramatically clear in his reference to the total absence of revaluations under Labour Governments—and cause shifts in rateable values and rates payable which can be dramatic. Without the protection of withholding half the increase, some ratepayers could be seriously embarrassed. We shall want to put the Minister through his paces on this in Committee.
I have received representations from the Rating and Valuation Association and others that clause 7 will substantially reduce the rights of ratepayers. It effectively restricts the right of appeal against rating assessments to appeals made within 12 months of the introduction of a new valuation list. This provision would, for example, deny a new tenant or purchaser of a building the right to appeal against the rating assessment of a building that he takes over where the previous occupier may not have been aware or concerned that the rating assessment was incorrect.
Why do the Government think that ratepayers' rights should be summarily eroded in this way? Mutuality does not apply. For example, the authorites will be able to make proposals under the relevant section—section 69, I think—of the Local Government Act 1967, long after the 12 months have expired. Only the ratepayer will lose rights here. We shall want to do something about that in Committee.
Unamended, the clause could lead to a considerable increase in the number of appeals arising in the first 12 months. Far from reducing the administrative burden of appeals, it could aggravate them by concentrating appeals in a limited period. This could lead to delays in dealing with appeals and to a backlog of cases. Indeed, we are still dealing with some of the appeals under the 1973 revaluation, even without a cut-off period. How can the Government argue that this measure will ease the work load of valuation departments if everything is crammed into 12 months?
Clause 8 is related to clause 7 in that, where an appeal is made against an assessment, the ratepayer may be required to substantiate the grounds of appeal before the case is heard by the local valuation court. That is unnecessary. Local valuation courts have power to dismiss appeals. That provision is merely an additional obstacle to the ratepayer. At first sight it appears to be yet another erosion of the position of the ratepayer, and we shall want to study that carefully in Committee.
We are also concerned about clause 9, which likewise seems to erode the rights of ratepayers. It provides for the abolition of an unrestricted right of appeal from a local valuation court to the Lands Tribunal. That is not likely to encourage ratepayers in the belief that justice at least is being seen to be done. A small degree of administrative convenience is being gained at the expense of the rights of individual ratepayers. The saving is minimal. As the Layfield committee showed, between April 1973 and August 1975 there were only 373 appeals to the Lands Tribunal, compared with over 1 million ratepapers' appeals to local valuation courts and over 20 million rating assessments. The Lands Tribunal case load is trivial, and there is nothing


wrong in keeping it going. Again, we shall want to look at that carefully in Committee.
We are worried by clause 10, which removes the exemption, which was granted in the Conservative Government's Local Government Act 1974, from interim increases in valuations where the ratepayer has made some improvements to his home, such as installing central heating. That provision will not reduce the work load of valuation offices and will be seen by ratepayers as a petty and spiteful attempt to penalise them for home improvements.
Clause 11 places a duty on rating authorities to recover rates from the owner rather than the tenant of a property in certain circumstance. The AMA has argued that that should be a power available to authorities rather than a duty. Perhaps the Minister can tell us why that should be mandatory on councils.
Clause 17 extends the end of the period during which a precepting authority, principally a county council, can make a supplementary precept on the rating authorities from September to December. The professionals believe that that could cause administrative difficulties for district councils. The ADC wishes to see the clause deleted from the Bill. Perhaps the Minister will explain why that clause is essential. We shall certainly want to look at that in Committee.
Clauses 19 to 21 make new provisions for the adjustment of the resources element in the rate support grant. Clause 19 empowers the Secretary of State to vary the amount prescribed each year as the national standard rateable value per head, in order to adjust the distribution of resources element of RSG as an alternative to clawing back a set percentage of resources element from all authorities where there has been overpayment. The Centre for Environmental Studies has carried out a detailed study into the problem of the resources element of RSG. It argues that the position could be improved without recourse to legislation. Will the Minister explain why he requires additional powers and what administrative options might have been open to him as an alternative?
Clause 22 deals with the reimbursement to local authorities of rebates granted under the Rating (Disabled Persons) Act

1978. The Bill proposes that 90 per cent. of rebates granted should be reimbursed by central Government. The AMA argues that the Government should meet 100 per cent. of these rebates. Will the Minister perhaps reconsider the 90 per cent. instead of the full 100 per cent., having created the precedent for gipsy camp sites? Why should rebates granted for the disabled not qualify for the 100 per cent. grant?
In addition, the ADC has pointed out that rating authorities which give charitable relief are reimbursed indirectly through the resources element of rate support grant. It argues that grant-aid for charitable relief should be paid on the same basis as that for the disabled, and it cites the example of Cambridge, which is a district with a large number of charities. It receives no resources element. The ADC argues that clause 22 should therefore be extended to give grants in respect of rating relief to charities. That is a fair argument, and I hope that the Minister will at least consider the possibility, if not now, in Committee.
We imagine that clause 25 will be deleted. Will the Minister confirm that?
Clause 26 removes the restriction on certain fees chargeable by local authorities. The issue is whether the clause goes far enough and whether, and to what extent, the Government propose to undertake the general review of charges as proposed by Layfield and accepted in the Green Paper on local government finance. The Government have so far taken only a tiny step.
The failure to relax more of the controls on charges is only one of a number of omissions from the Bill. The apparent abandonment of capital values leaves rates virtually unchanged. The Bill also lacks any comprehensive attempt to reform the grants, to relax control over capital expenditure or to prepare for an efficency audit. Although the Bill contains much that is welcome, it leaves a great deal undone, and the major reform of local government finance, presaged by Layfield and promised in the Government's Green Paper, remains largely unfulfilled.
We are seriously concerned about the proposals that erode the rights of ratepayers, and, while we do not propose to divide the House on this issue, we


shall certainly want to propose amendments to them in Committee.

11.7 p.m.

Mr. Stan Crowther: I agree with the hon. Member for Barkston Ash (Mr. Alison) and with my hon. Friend the Minister. This is an extremely modest Bill. Its proposals ought to be welcomed, but it could have gone a lot further. I greatly regret that the opportunity has not been taken to deal with the basic unfairness of the way in which the rating system operates.
My hon. Friend was understating the case when he said that rates are not a popular tax. They are probably the most unpopular tax of all, even more unpopular than income tax. While a great deal of this is due to the artificial heat generated by ratepayers' associations and many newspapers, that does not hide the general resentment at the fact that rates do not reflect either the consumption of services, which would be almost impossible to achieve anyway, or the ability to pay.
I appreciate that there is a means-tested rebate system, but even that, in a sense, exacerbates the injustice by concentrating it within the band of those who do not get the rebates. It is some time since the Layfield report was published. It is even longer since the previous Conservative Government produced their Green Paper on local government finance, which came out in about 1971 or 1972. Unless my memory is at fault, both of them concluded that while there was no feasible alternative to the rating system, it nevertheless needed to be greatly refined.
I welcome the Bill in that it seeks to eliminate a number of fairly minor anomalies, but it does not refine the system as many think it should be refined. I am not suggesting that there should be a local income tax to replace the rating system, but surely it is not impossible to devise a system under which a household containing only one wage-earning adult does not pay as much in rates as a household living in similar premises but with three, four or even five wage-earning adults. That factor causes the greatest resentment against the rating system. I do not know whether we shall ever tackle this problem. We have been discussing

it for years. Every hon. Member knows that this is one of the most common complaints we get. Neither this Government nor the previous one—and no Government before that—have been prepared to tackle this basic problem.

Mr. Nicholas Winterton: The hon. Gentleman has just said that he would like to see a form of rating which would reflect the use of local facilities and the number of earners in a household. In the breath before that statement, however, he said that he turned down the proposal for a local income tax. Is not a local income tax system the only system which would reflect the sort of proposals that he has put to the House?

Mr. Crowther: I did not say that I would wish to see a system which reflected the use of services, because I do not think that that is feasible. I am not in favour of a local income tax because it would not reflect the need of local authorities for resources. It would result in the authorities with the highest levels of income in their areas receiving the highest level of resources. That, in an area such as I represent in South Yorkshire, which is a low-wage area, would not solve any problems.
I am worried about the resentment among many ratepayers at the fact that a family with four or five wage-earning adults pays the same rates as the family in the house next door where there is one adult earner. That is a basic cause of resentment about the system.
I am disappointed also at another omission from the Bill. I am sorry that the opportunity has not been taken to abolish, or to modify, the principle of ultra vires, which makes it impossible for local authorities to engage in most forms of commercial activity. I have never understood why profit-making should be regarded as inappropriate for the ratepayers. I think that it would be very sensible if the rate fund were to gain from commercial enterprise. Long ago, the old Association of Municipal Corporations, when it was making its representations to the Redcliffe-Maud Commission, recommended the abolition of ultra vires.
Nothing was done about it, unfortunately, and it seems particularly illogical nowadays that local authorities can make profits from gambling, while they


are not allowed to engage in responsible commercial operations such as retail trading, the provision of architectural services, building contract work or property repairing. There are many ways in which local authorities could reduce the rate burden if they were allowed to enter into commercial activities. It seems a great pity that the opportunity has not been taken in the Bill—as it was not taken in all previous local government finance Bills—to allow local authorities to do this kind of work.
Having described two ommissions from the Bill which have caused me disappointment, I think that the things which are in the Bill are sensible. The Bill ties up loose ends and does away with a lot of anomalies, and, despite what the hon. Member for Barkston Ash said, I hope that it will get an easy passage through the House.

11.14 p.m.

Mr. Arthur Jones: I have recognised the general purposes of the Bill, which are to tidy up a variety of questions of rating, to bring about the more effective collection of rates, to aid the recovery of rate arrears and to assist ratepayers in need. I warmly welcome these adjustments, which will, perhaps, make the rating system more effective.
I address myself to those clauses in the Bill under the heading of"Alterations of valuation lists "—that is, clauses 6 to 10. Clause 7, I regret, denies to a ratepayer the centuries-old right of appeal against an assessment. That places as unfair limitation on the rights of a ratepayer. The Minister says that the purpose is to streamline rating and to do away with the large number of appeals, but this may not be the outcome.
I understand that under clause 7(7) any appeal against the value ascribed in the valuation list must be made within 12 months. Some of the defects of that provision have been described effectively by the hon. Member for the Isle of Wight (Mr. Ross).
The Association of District Councils states:
 The Association is not happy with the proposal to restrict the rights of ratepayers to appeal against the values in the new list. While one year may be a reasonable time

for the large commercial or industrial ratepayer, who usually has professional advice, there may be circumstances which prevent the small shopkeeper or private occupier from appealing. Unrestricted rights of appeal are not necessarily the answer, but we think a reasonable compromise would be a two-year period.
I am not sure that I subscribe to the latter part of that statement. I do not see any severe disadvantages in leaving the system as it is. There is to be no right of appeal similar to those which the public have enjoyed throughout the courts or the Lands Tribunal. That is unfortunate.
Press notice No. 51 from the Department of the Environment issued on 6 February stated:
 A provision of this kind…was recommended by the Layfield Committee on Local Government Finance (Cmnd. 6453, page 176) as necessary, to discourage the volume of appeals based on invalid grounds, to enable regular five-yearly revaluation to be carried out by the Valuation Office of Inland Revenue.
But those revaluations have not taken place. The Minister is paying lip service to the fact that we must make administrative economies to allow the Inland Revenue to carry out the revaluation. The Minister recognises past errors. Let us hope that lessons have been learnt.

Mr. Alison: There has been a 10-year gap.

Mr. Jones: I agree with my hon. Friend. The late Richard Crossman said in his memoirs that a political decision led to his deciding to recommend to his colleagues in the Cabinet that we should not have a particular valuation. But no revaluation has taken place under a Socialist Administration in the post-war years. The Conservative Party has been in trouble about revaluation. Ministers nod about that, but if one argues that the rating system needs a revaluation it is up to the Government of the day to institute it. It is wrong for Ministers to make the plea that they have made.
I am told that there has been as long a gap as 10 years between one valuation and the next. Is it reasonable for someone not to lodge an appeal when perhaps he has to wait so long before a mistake or a misjudgment can be corrected? I am reliably informed that no less than 1 million appeals have been lodged as a result of the revaluation list. It is a fantastic


figure. Many were settled between valuers, but about 1,000 have gone to the Lands Tribunal, which bears only about 120 cases each year, 40 per cent. of which have been successful.
That really is not a tremendous burden for the Lands Tribunal to carry. I cannot see the validity of this recommendation. As I understand it, it is to save administrative and staff problems, perhaps, in the department. But it will deny the general public and the individual a right that they have had for very many years. I consider that to be the wrong approach. The fact that there has to be this 12-month limit will mean that more or less everyone who is in any doubt about his rateable valuation will put in protection proposals against the revaluation figure. He will say"I will put in a protection, then I can think about it or get a valuer to look into it for me later on." A significant number of protection proposals will be made when revaluation is done.

Mr. J. W. Rooker: Am I right in assuming that, by and large, big business automatically objects to the rates? A good percentage of the 1 million appeals are lodged not by the domestic ratepayer but by big business. In Birmingham a few years ago, it was discovered that millions of pounds were owed to the city simply because certain firms had decided to appeal. It was said that it was done as a matter of company policy. Have I got it wrong?

Mr. Jones: No. I think that the hon. Gentleman has got in right. This situation is a reflection on the whole method by which rating assessments are calculated.
In my experience—I am interested in rating and valuation professionally—almost invariably, if one challenges a rating valuation, whether it be a large property or, say, a shop, one can get something off it. It is a question of judging whether it is worth going to the expense of instructing a valuer to try to get a few pounds, or a few hundreds, or, in the case of a large assessment, such as that for a factory, a larger figure, especially when one realises that that concession will last until the next revaluation. It can come to a very significant sum of money. It is a judgment which individuals make as to whether it is worth lodging an appeal, having

the valuation done and having one's own private valuer to put his view against the Inland Revenue assessment.
We shall see these lodgments against assessments by anybody who has an assessment of any significant size, but we shall still have the situation in which the domestic ratepayer probably will not lodge an appeal. It is the domestic ratepayer with a grievance who will lose out. The big people will not lose out, because they will put in their appeals as a matter of form. That will not save work in the Inland Revenue. It is the small man with the domestic hereditament who is being penalised by the withdrawal of the right of appeal to the courts and the Lands Tribunal. That is really the burden of my complaint, and I am grateful to the hon. Gentleman for giving me the opportunity to elaborate my ideas. The penalty will lie against the individual domestic hereditament—the individual rather than the business, commercial and industrial ratepayer.
I recognise the difficulties in long-term planning of rating in view of the declared policy of the Conservative Party with regard to domestic rating. I had hoped that we would hear from my hon. Friend the Member for Barkston Ash (Mr. Alison) what the Opposition's proposals were in this respect. We should all very much like to hear what is proposed. But not today, apparently.

Mr. Rooker: The hon. Gentleman is not even a candidate.

Mr. Nicholas Winterton: My hon. Friend is in very expansive mood. Will he give those of us on the Opposition Back Benches, and perhaps those on the Government side, too, his ideas on how he would like to see the rating system modified? Perhaps he would take up the points made by the hon. Member for Rotherham (Mr. Crowther) about a local income tax which would ensure that all earning people within a particular house made a contribution to the funding of local facilities.

Mr. Jones: I am tempted to do that. I have given a great deal of thought to the whole problem, but, as is generally known, my influence in this place is on the wane. [HON. MEMBERS:"Shame."] I shall not be here to make an effective contribution to those discussions, so I shall resist the temptation.
Ways and means should be found of making economies other than a denial of fair and reasonable appeal procedures. It would be interesting to hear what may be proposed as possible in this regard, particularly in the use of computer aids. I should have thought that this was a matter in which computerised aids could be effectively used for rate collection and the monitoring of rating valuations. I have no idea whether that has been considered or examined—indeed, as far as I know, it may be operative—but I should have thought that the Goverment would be addressing themselves to administrative economies there rather than to what amounts to penalising the ratepayer, and particularly the domestic ratepayer, by these four clauses in the Bill.
My submission is that the rights of the individual must not, in the circumstances to which I have referred, be sacrificed to administrative convenience.

11.28 p.m.

Mr. Stephen Ross: I am sorry for the hon. Member for Birmingham, Perry Barr (Mr. Rooker) who is waiting for his Adjournment debate, but I wish to detain the House for about 10 minutes, and I hope that he will forgive me.
I shall state at the outset what I think the Government should have done after Layfield. They should have accepted one of the Layfield recommendations—that is, to institute a local income tax. They should not have been put off by the red herring that is always trailed across these matters by the Inland Revenue, that it would would take another 12,000 civil servants to implement it. What would happen to the various valuation departments of the Inland Revenue if the present rating system were to be taken from them? Surely, they could be transferred to implementing a local income tax. We had just the same thing over the 12,000-plus to administer the Community Land Act, which, thank goodness, has never taken up to anything like that number. I think that that was probably the paramount consideration in the Government's mind in deciding not to take up the suggestion.
I put on record straight away that my party goes along with the suggestion for a local income tax. I accept that it would probably not be sufficient to raise

enough revenue, and Layfield recommended also that there should be a rate based on capital values. I put it to the Goverment, as I put it to the Secretary of State when he asked me, that capital value rating is not a very good system. Although at one time when I used to practise in valuation courts I supported the idea, I changed my mind in the 1970s due to the enormous ups and downs—the yo-yo fluctuations—in capital values.
One has only to look at the rise between 1971 and 1972, and again between last year and now, when some properties rose perhaps to figures of £100,000 or so and then dropped to £40,000 or £50,000. How on earth would the Government be able to bring in a Bill of this sort, which gives one year to make an objection, and say"Because your value has dropped by £40,000 or £50,000, you cannot make any objection for another four years "? That would be ludicrous. I do not think that could happen. I accept that Layfield said that it should be done between bands and that there should be a divisor. Nevertheless, rents rise more evenly. Agricultural rents are a typical example of continuity.
I know that at present there is very little evidence with regard to unfurnished property. If only the Government had the guts to bring in a review of the Rent Acts, we might get some evidence on which to base our judgment. That would be a much more sensible basis on which to work. If the Government are not prepared to introduce a local income tax, a system based on rental values is the next best thing.
I believe that the Government should direct their attention towards some form of site value rating. I am not entirely sold on this idea, as are many members of my party, and I accept that Layfield refused to look at this because it considered this matter in the context of the Community Land Act and felt that any form of profit out of land values in the future would disappear. It was, after all, intended that development values would be taken away over a 10-year period. But that will not happen, and land transactions will still take place. A site value tax could, therefore, be introduced.
In the first instance, I would restrict this to development land. I have made this point time and time again. I do not


know why we need a DLT and the Community Land Act when we could put a site value tax on land which carries planning permission immediately it gets that consent, provided that it has all the facilities to go with it. That money would go straight into local government and would be a good, added source of revenue. It would also fulfil the idea of"positive planning"which was favoured by the now Minister of Agriculture, Fisheries and Food when he was Minister for Planning and Local Government. Of course, on the Isle of Wight we would also have a landing tax, which would just about do us.
I commend the hon. Member for Daventry (Mr. Jones) on the speech that he made. About 400 of my constituents, including the former Conservative mayor of Newport, crowded into a room last Monday, wanting to know what we would do about changing the rating system. They want nothing more to do with the present system. We have had no answer from the Conservative Front Bench this evening. The hon. Member for Daventry also had the courage to make that point and said that he would be interested to know.
The public are entitled to know what the Conservative Opposition would put in place of the present system, particularly if during the next election—as happened during the last one—they issue posters stating that they will reform the rating system and do away with domestic rating. We are entitled to have some honesty on this subject.

Mr. Alison: The hon. Gentleman is expecting honesty on this subject—

Mr. Ross: Yes.

Mr. Alison: —but he cannot accuse us of dishonesty if he is complaining that we have said nothing at all. I hope that he will withdraw the imputation of dishonesty. It may be that we shall be prepared to make a statement before very long, and he ought to wait and see—a good Liberal principle.

Mr. Ross: I concede that we shall be delighted to wait and see. I hope that it happens before the next election, because it is fair to say that the October 1974 election campaign was pretty unfair—I withdraw the word"dishonest "—because it gave the impression that the Conservative

Party would do away with the domestic rating system.
Another point that is constantly put to me is that Southern Ireland has done away with its rating system. There is a much more centralised administration in Southern Ireland, but it is noticeable that about 50,000 Southern Irish citizens recently marched through Dublin in favour of changing the taxation system. Therefore, we can move from one corner into another. We must be fair and honest with our constituents and point out that all systems have a measure of unfairness, and it is up to us to try to get it as right as we possibly can.
I welcome clause 3 of the Bill, which makes a minor increase in the relief available to small commercial premises with limited accommodation. Incidentally, it will help me because I have a garage which is separately assessed. However, I fear that this does not go far enough. It is my view that due to the present very high rates of interest on overdrafts and mortgages, coupled with the disastrous effects of the recent strikes, in particular the transport strike, many small shopkeepers and light industrial units are facing bankruptcy. Indeed, one small company in my constituency lost about £38,000 due to that strike. One went bankrupt only at the end of last week in the town where I live. I must declare an interest as a small shopkeeper. I own a china shop.
Therefore, some measure of derating—or, at the very least, an entirely separate rate rebate, be it of only limited duration, perhaps for two or three years—is urgently necessary. It could be linked to the amount of the gross or net annual value and, for argument's sake, be applied to property of, let us say, less than £1,500 net annual value—perhaps a little higher in London. With many small shopkeepers and light industrialists facing rent increases of the order of 30 per cent.—in my constituency people are facing rent increases of over 25 per cent.—more urgent help is called for.
I ask the Government to give serious attention to this point. If it is the Government's intention to assist the smaller concern—I think both sides of the House are agreed on that—on which so much of the nation's future well-being depends for the creation of wealth and for employment, in industry and in the services, this is surely one way in which we can be


of positive help. I should therefore like to see clause 3 substantially widened in its application.
Clause 10 is a niggle and is unacceptable to me. Why should anyone who improves his property by installing central heating or a bathroom immediately be penalised in this way? The hon. Member for Rotherham (Mr. Crowther) will agree that this is another bone of contention for everybody concerned. If quinquennial revisions were not continually postponed, there would be no need for this provision. I would welcome a legally binding directive from the Government that the Inland Revenue should carry out the quinquennial review, if we must carry on with the present system. As the Association of Local Councils rightly points out in its brief to hon. Members, this is one of those provisions which cause greater resentment to the prudent occupier.
Clause 17, which deals with the supplementary precepts, strikes me as highly inflammable, particularly at a time when there is a growing rate revolt in many parts of the country. It is a matter which the House will have to face. It will be 1974 all over again. Indeed, I think that it will be a good deal worse. Even to talk of a possible further precept in the coming financial year is dynamite, and the Government would be wise to drop it. There is no way—I repeat"no way "—in which local authorities should be obliged to make a further demand of their ratepayers.
If the Secretary of State, who has played a leading role in the recent wage awards, intends to pass even some of the increase on to local councils, and in turn to ratepayers, it will lead to a very serious situation in the country. Most authorities have absolutely nothing left in their balances and will therefore be forced to make a further precept. The Isle of Wight county council has warned that, if any of the wage award is passed on, it will have to come back next August and make a further precept.
I ask that a statement be made as quickly as possible to allay the fears of authorities and ratepayers. Central Government, and indirectly the taxpayer, will have to pick up the bill. The necessary economies will have to be made, preferably among staffing levels in the upper

tiers of management. The issue will have to be faced by the House and by one Government or another.
Clauses 19 to 21 appear to be helpful and, therefore, they are to be welcomed. Clause 23 seems to avoid what is required. I have pleaded before for a national disaster fund. Many authorities will not spend up to the product of a penny rate when there is a local disaster, while others have to spend sums vastly in excess of such a rate. I hope that in Committee questions will be asked about EEC funds for this purpose. Why is it that we can never get any of that for local authorities when disasters occur such as those at Torcross and Portland, to name but two of recent memory?
I regret the omission from the Bill of two important matters that have been highlighted in the brief from the Association of Local Councils. The brief states that the Bill
 makes no attempt to deal at all with those two financial issues which concern all 8,000 parish, town and community councils…and which were the principal subjects of the Association's written and oral evidence to the Lay-field Inquiry into Local Government Finance and of the Association's discussions with…the Under-Secretary of State, during the consultations on the Layfield Report.
These issues were (a) the payment over to local councils of that portion of the rate support grant which is received by districts councils because of the precepts issued to the districts by the local council; (b) the need to ensure that when a district council is carrying out in part of its area a function which elsewhere in the area is discharged by any local council, the cost should be specially charged by the district council on the area for which the function is being discharged and should not be charged equally throughout the district 
I am referring to cemeteries, for example.
My hon. Friend the Member for Berwick-upon-Tweed (Mr. Beith) and I have supported the association's contention. In a note to me, my hon. Friend says:
 What this means in practice can be seen in my constituency. One district pays over the rate support grant amount to the parishes, but the other does not.
He takes the example of Wooler in his constituency. He states:
 If we levy a 2p rate, they raise £3,000 and should in theory get rate support grant ".
He observes that that would be an addition of about £1,800. He says that in fact the district council
 pockets the lot 


and
 uses it to maintain the same facilities—eg., cemeteries and public halls—in the town of Berwick, which does not have a parish council and in which no local precept is raised! In fact, the district council would prefer all the parish councils to pack up and go home and leave them to run the district undisturbed.
I am firmly in agreement with my hon. Friend when he writes:
 I am strongly opposed to this attitude, as are many people in the villages, but the present RSG arrangements offer a financial inducement to the parishes to hand over all their duties to the district! 
A similar situation applies in the parish of Bembridge in my constituency, and no doubt it applies elsewhere. I made representations to the Under-Secretary of State only a month ago. I regret that the opportunity has not been taken to put the matter beyond doubt. The present permissiveness is unsatisfactory and should be dealt with by the Bill.
If we really mean to give power to those at local level—I hope that we do, and, by God, we should—we should give them the chance, for example, to decide where to place their double yellow lines in the smaller towns and to make decisions on many other purely local matters. I hope that the Government will think again. If some suitable amendments are tabled in Committee to correct the injustice, I hope that the Government will consider them favourably.
Finally, could not the Bill be used to change the law that applies to vacant listed buildings, which for some reason are specifically exempted from discretion under the 1967 Act? That provision may have been well meant when it was drafted, but in my view it is wrongly conceived and allows the owners of such buildings to avoid paying rates and to leave the properties until they are on the point of falling down. I should love to take the Minister to a property in my constituency that has been empty for 25 years. These listed buildings are part of our priceless heritage. Let us rate them and get them repaired before it is too late.

11.44 p.m.

Mr. R. B. Cant: I apologise to my hon. Friend the Member for Birmingham, Perry Barr (Mr. Rooker) for delaying his Adjournment debate. There are one or two aspects of

the Bill on which I should comment. I do not know to what extent I am qualified to do so. This is my twenty-sixth year as a member of a local authority, but I have always taken the precaution of being on spending committees and not on the finance committee. Therefore, that is somewhat of a closed book to me.
I should like to take up the point made by the hon. Member for Daventry (Mr. Jones) concerning valuation, especially in relation to valuation courts and the possible threat to democracy. In my early local government days I was a member of a valuation panel. I came to view this as the grass roots of the local government democratic system. There were four or five councillors or others on the panel. People would come to the panel. If we were in any doubt about whether a cottage or other property was overvalued or undervalued, we would go into the country and have a look at it. It used to take a lot of time, but we felt that we were performing a democratic service. That opportunity may be lost if the clause in question is passed. I do not think that drawing parallels between these valuation panels and the Lands Tribunal is valuable. We shall have to see what happens.
Contributions have been made by hon. Members on both sides about the rating system. I am an absolutely unrepentant supporter of the rating system. I know, as the Minister said when eloquently introducing the Bill, that many people have tried to follow the will-o'-the-wisp of an alternative and painless system of local government finance. I do not want to develop that theme. One of the great virtues of the rating system is that it makes local government local in the sense that it keeps councillors on their toes. If we were to take refuge in income tax or any other system in which revenue was lost in the general maw of public finance, I am sure that the local councillors would look to future elections and consider councils' expenditure in perhaps a slightly more light-hearted fashion. There is nothing in local government which so concentrates the minds of local councillors as fixing the rates. This democratic system should remain. As a practical man, I have always believed that it would be difficult to find an alternative tax that would raise the large sums involved.
Although this is a Second Reading debate, I do not wish to make a Second Reading contribution by discussing the matter in terms of general principle. I support the rate support grant. The Government's contribution to the reform of local government has been limited. However, they might have tried to do a little more than they are doing in the Bill.
It is wholly delightful that whenever the humblest member of a council nowadays talks about grants and the rate support grant, he refers to multiple analysis, clawback, the damping effect and other highly technical terms which he uses on public platforms and at the hustings. Most people will agree that the end product of this esoteric exercise is not wholly satisfactory.
I cannot help but feel that in the county council of which I am a member—Staffordshire—one cannot get a satisfactory basis for rate support grant distribution which does not take into account the number of schoolchildren. It is remarkable that where there is a shire county—they are very outmoded in these days and no one believes in them, apart from the reactionary people on the Opposition Benches—which has proportionately the second largest school population, it should do so badly when it comes to rate support grant. This is just one facet of the problem.
Another important matter which will have to be considered more seriously in the future is the way in which so many claims on local government funds at the disposal of the Department of the Environment are now being made that they are distorting the whole nature of the grant, both directly and indirectly. There is a new policy relating to the re-vitalisation of inner city centres, areas of deprivation and so on. However indirect the effect of the financing of this policy, the impact on local government grants and finance can be quite serious, especially if one lives in an area which, although it includes cities, which are in many cases deprived, finds that there is nothing doing for it in financial terms because it does not fit anywhere into the fancy terminology or nomenclature of partnerships and so on.
There is another quite serious problem of deprivation which is related, in a sense, to land reclamation. I refer to land which is made derelict because of industrial development, coupled with mining subsidence. Whereas one might be able to change part of the Shelton steelworks site, which is being closed down, into a very nice landscape with a 100 per cent. grant, it is quite impossible to persuade the Department of the Environment, because of all the other pressures, to give any special grant to help with the reclamation of the area for industrial purposes, because this does not come within the definition of dereliction. Life is becoming more complicated for the DOE, and I am not sure how far the rate support grant fits into this.
In times such as these, the rate support grant suffers very greatly from the problem of uncertainty. It is quite incredible, serving on a local council and watching those who have the job of fixing the rate—as distinct from the people who sit on the education committee or deal with planning and development—to see the difficulties with which they are faced in knowing exactly what sort of rate to levy. In normal times it is bad enough, but currently, with cash limits—which might or might not be exploded, depending on how one interprets the Chief Secretary's remarks at various dinners—one has to make some sort of judgment on these issues.
I am surprised to hear the hon. Member for the Isle of Wight (Mr. Ross) say that there is not one solution to this problem, in Tory terms. The solution is that one builds up what I would regard as quite irresponsible balances to meet every possible contingency, and one does this cynically two years prior to the next county council election. However, I shall not pursue that point.
It is very difficult to try to be realistic in fixing a rate and saying"We shall do what the Government ask us and allow 8 per cent. for inflation and 1 per cent. for growth ", knowing all the time that all these good intentions that are being eroded by the movements taking place in prices and, for some reason, increased staff and so on.

The Under-Secretary of State for the Environment (Mr. Kenneth Marks): Does my hon. Friend agree that last year,


when inflation was at 8 per cent., a great many treasurers calculated beforehand that it would be a lot more than 8 per cent.?

Mr. Cant: Yes. There is no doubt that what one might be losing on the swings this year one gained on the roundabouts last year. To a very large extent, the source of the balances held now by councils finds its origin in those circumstances.
I support the Bill. Like many hon. Members, I have my complaints. I do not think that the Bill goes far enough. However, as a general philosophical principle, I support it, because I am getting tired of politicians who come to the Dispatch Box and want to change the world and turn it upside down. A few moderate changes and some improvements, such as those outlined in the Bill, are what people want. It is time that we got a bit more settled down and stopped talking about wholesale reform of one kind or another.
I was saying to a senior official only the other day that what we need is not the reform of local government, and not what is taking place in many authorities in the way of new management schemes and heaven knows what, but merely a simple capacity on the part of local government staff to be courteous and to answer letters in less than two months.

11.58 p.m.

Mr. Nicholas Winterton: It is a great pleasure to speak after the hon. Member for Stoke-on-Trent, Central (Mr. Cant), because on many occasions I find myself in considerable agreement with much of what he says. His understanding of economics is to be respected. I know how much his service to Stoke-on-Trent and to Staffordshire is respected in the West Midlands.
My constituency is not very far from that which the hon. Gentleman serves. In coming to London every week, I pass the Shelton iron and steelworks, which is off the new Potteries D road. I agree very much with the hon. Gentleman that it is extraordinary that the city of Stoke-on-Trent could get a huge grant from the Government to lay out the land for a recreation area now that the works has, sadly, come to the end of its useful life but that it can get little or no assistance

to provide alternative employment, which is what is required in the north of Staffordshire and the Potteries in particular.
The hon. Gentleman's contribution to the debate was valuable, perhaps particularly when he said that we want not dynamic or dramatic change but a touch on the tiller, perhaps, and a little moderate change here and there. I agree with him about that in most cases—but not quite so much tonight, because I believe that slightly more than a touch on the tiller is required for the rating system.
I go along with the hon. Member for the Isle of Wight (Mr. Ross) when he says that it should not be beyond the wit of politicians, of those who run local government and of those who run the Treasury to institute a system whereby all those who earn within a local authority area make some contribution to the funding of the facilities in the area. I do not know whether that means a combination of local income tax and the present rating system modified to suit a local income tax. I do not believe that it is beyond the wit of the Government to devise a system which is more fair than the present one. I am delighted that the hon. Member for Rotherham (Mr. Crowther) is nodding his head.
If the hon. Member for Stoke-on-Trent, Central had received, as I did in 1974, nearly 2,000 individual representations from constituents—my constituency, with 85,000 or 86,000 electors, is larger than his—he would know that the importance of rates to people was well established with me, not just as a ratepayer but as a Member of Parliament seeking to represent the best interests of those in the area I serve. I believe that within a month or two hon. Members will be receiving very hot and numerous representations from their constituents, as I did in 1974.
It is unfortunate that this important debate is taking place so late at night. It is a pity that the Bill we were debating prior to this one is not being debated now and that this Second Reading debate did not come on in the major part of the day when the majority of hon. Members could have been present.
I fully endorse the view expressed by the hon. Member for the Isle of Wight on behalf of the Association of Local


Councils. I happen to be a vice-president of that body. The representations which it has made are very sound. It is a pity that the position of parish, town and local councils has not been more carefully regularised and established in the Bill. I know the injustice that they feel, and particularly the injustice felt by parish councils which are raising money from their areas, whereas money is not being raised in other areas which do not have a council. As the hon. Member for the Isle of Wight stated, the parish areas which are represented often pay twice for a service. This is a grave injustice. It undermines the whole purpose of parish and local councils. I hope that the Government will make some comment on this matter.
We have talked about the system of rating. I hope that the Minister will deal constructively with this matter in his speech in reply. The Minister's opening speech was spoilt by his snide remarks aimed at my hon. Friend the Member for Barkston Ash (Mr. Alison). At this moment, we are not in Government. The Socialist Party is. This debate is about the content of the Bill. It does not deal with what we propose when we take office shortly. I shall press my party to introduce reform of the domestic rating system. I believe that it is long overdue.
The hon. Member for Stoke-on-Trent Central referred to the allocation of the rate support grant. He drew attention, rightly, to some of the problems that the area he represents so well is experiencing under the present allocation. He denigrated slightly the shire counties. For about six years I was a county councillor in a shire county, although it was not the county in which I now have the honour to represent a constituency. The hon. Gentleman was a little unfair.
The hon. Gentleman spoke particularly about education and numbers of children, and the consequent problems of organising the needs of an area. Cheshire is one of the few areas that is actually growing, yet, under the rate support grant allocation of this Socialist Government, we have lost many millions of pounds, although we have to provide more school places and all the infrastructure associated with a new town. Part of the latter is separately funded, but part also has to be found by the county council. Perhaps the Minister will consider how Cheshire has suffered.
I admit that we have suffered this year less than several areas in Inner London, for example, where rates are due to rise—this applies to the area in London where I rent accommodation—by up to 50 per cent. How the Government will explain such a rise I do not know.

Mr. Cant: Mr. Cant Why is it that Cheshire, which is one of the richest counties, nevertheless enjoys intermediate area status? Was there some political reason for that?

Mr. Winterton: The hon. Gentleman is right. The whole of Cheshire is an intermediate area, but that benefits the county only slightly.

Mr. Rooker: Would Cheshire give it up?

Mr. Winterton: Mr. Winterton The amount of grant available to business to set up in an intermediate area is limited—much less than is available for full development area status such as applies to Merseyside and elsewhere. I agree that parts of Cheshire have low levels of unemployment. My own area has perhaps the lowest unemployment in the whole North-West, but that is because it is very progressive and relies heavily on smaller business. I have told the Government many times that the encouragement of smaller business could go a long way solving our unemployment problems. We also have efficient Conservative councils which spend the ratepayers' money—that which they have-very well.

The hon. Member for Birmingham, Perry Barr (Mr. Rooker) asked whether we would do without intermediate area assistance. If regional policy were changed, and if other areas gave up such assistance as well, so that we encouraged efficient industry rather than seeking to prop up inefficient industry, I should be prepared to see the system change. I am much more keen on long-term employment prospects than on short-term measures to sustain industries which, because of changes in demand, should gradually wind down and be replaced by others.

I also fully agree with what has been said about the disincentive of the Bill and present rating legislation when it comes to improving one's home. It seems stupid to give grants for home improvements and then to raise the valuation and thus the rates. If one installs central


heating or modern sanitary facilities, the rates should not rise. The valuation of property should be altered to allow such things to be done without detriment. We want to save property and not provide a disincentive.

Mr. Stan Crowther: Does the hon. Member agree that all that is happening is the restoration of the position that existed until the 1974 Act? Is he suggesting that there was a tremendous disincentive to people to improve their homes until 1974 and that the incentive has existed for only the past five years?

Mr. Winterton: No, I am not making that point at all. There is a disincentive in this, and there has been a disincentive for people to improve their homes. When they improve them, the valuation goes up and inevitably their rates go up. It has been said that people pay taxes in sorrow and rates in anger.
As my hon. Friend the Member for Barkston Ash has said, there are good points in the legislation. However, bearing in mind the promise that has been made in many reviews of local government and local government finance, it is extraordinary that more positive measures have not been brought forward to change the major injustice. I am confident that parts of the legislation will be heftily amended in Committee or struck out altogether. The Committee stage will be interesting, and I hope that representations made to its members will be more numerous than those this evening. It is an important debate which has been badly attended. It has come at too late an hour, and I hope that in future the Government will improve the order of their business.

12.11 a.m.

Mr. Tim Sainsbury: If we accepted the Bill in the way that it was presented by the Under-Secretary, as domestic ratepayers we should all be rushing to declare interests, as the benefits would seem to be many and substantial. I am a director and shareholder of companies that will derive minor benefits, but the Bill does not seem to have found many friends since it was presented in such glowing terms. Clauses 3 and 4 have been well received, but many doubts have been expressed on others. It is perhaps the omissions from the Bill that have commanded the greatest attention. The

presentation is late for a Bill which is of great importance to every ratepayer. It would have commanded more attention earlier, and I hope that the remarks of my hon. Friend the Member for Macclesfield (Mr. Winterton) will be noted.
The hon. Members for Rotherham (Mr. Crowther) and for Stoke-on-Trent, Central (Mr. Cant) have commented on the omissions from the Bill. We seem to be promised an interesting Committee stage, and if new clauses are moved to cover all the points of omission it will also be lengthy.
It would be helpful if we could have the notes on clauses that the Department of the Environment normally produces in good time instead of at the last moment. Indeed, it would have been helpful if the notes on clauses had been available in the Library before Second Reading. I go further. The Bill inevitably refers to amendments to existing legislation. It could well have been more sensible and helpful to have had an amended text. That might have expedited our proceedings at this stage.
Clauses 7 and 8 place a restriction on the right to make a proposal to alter a valuation. They have found no friends and have been severely criticised from both sides of the House. They represent the contra-argument to the advantages of the rating system which were described by the Minister. If we have a tax which, as he says, is so easy to collect because it goes with the property, it follows that the only way to object to such a tax is to object to the assessment on the property. That means that any new owner must feel that he has the right to make such an objection. He does not know the circumstances which led the previous owner not to make such an objection, when it might seem to him an obvious one to make.
To take away that right seems totally unjustified. Every ratepayer expects to have it and would bitterly resent not being able to exercise it merely because he bought the property more than a year after a new assessment came into force. In any case, the proposal is fairly weak. It is said that it would still be possible to make an objection if there were significant changes in the environment of the hereditament. How is one to determine, other than by an appeal to a valuation court, whether there has been a significant


change in the environment? One might well find in practice that the proposal did not create a saving in the work of the valuation court and of the district valuers, as the Government seem to expect.
To remove this right of appeal without providing a cast-iron guarantee that there would be a revaluation every five years seems to be totally unreasonable. My hon. Friend the Member for Daventry (Mr. Jones) has pointed out the unhappy circumstance that there has never been a revaluation when a Socialist Government have been in power. One might say that that is another good reason for not having Socialist Governments. Perhaps there is the slight risk of one being returned again before the century is out. We therefore run the risk as ratepayers of once more, for political reasons, having a revaluation deferred.

Mr. Stan Crowther: If the owner of a property fails within the 12 months allowed to apply for revaluation and he sells it, is he not asking for trouble? Is he not devaluing the property by permitting the rateable value to remain at a higher level than that which should obtain? The purchaser knows what the rateable value is when he decides whether to buy the property.

Mr. Sainsbury: The hon. Gentleman has a reasonable point, but he entirely overlooks the individual circumstances of the ratepayers. In my constituency there are many elderly ratepayers. Many of them, because they will want to avoid the trouble and expense of getting professional advice, or because they may not be in a position to get it, will not challenge their assessment. In those circumstances, it would be totally unreasonable if an elderly or dying ratepayer, by his own omission at the end of ownership, devalued the property which he was passing on to his successors or which was to be sold.
What happens if there is a successful challenge to an assessment which results in a significant reduction in the valuation of a hereditament and the neighbours living in substantially the same sort of property, with almost exactly the same valuation find that because they have not put in an appeal they are not able to change their valuation? There will be a row of identical properties, one with one valuation and the others with another.

that will give rise to a great deal of resentment and bitterness.
Enough time has been spent on clauses 7 and 8 about which we shall have much to say in Committee. Clause 10 concerns the variations of rating assessment as a result of minor alterations and improvements. I find this clause worrying. My hon. Friend the Member for Macclesfield, in his commendably blunt way, said that it was stupid. The more moderate view of the hon. Member for Isle of Wight (Mr. Ross) was that it was a niggle which would be resented by many householders.
The Government have presented clauses 7 and 8, which take away from ratepayers the right of appeal, because of the need to save manpower and because we must allow district valuers and the valuation courts to get on with the business of five-yearly revaluations. Socialist Governments in the past have been reluctant to bring this about. It is surprising that they should promptly put into clause 10 a lot of extra work for the district valuer who has to make minor adjustments to assessments as a result of modest improvements by ratepayers.
It is even more surprising when we look at the Local Government Act 1974, which the Bill proposes to alter, and see that on Report the right hon. Member for Birmingham, Small Heath (Mr. Howell), who is now the Minister of State, Department of the Environment, far from disagreeing with this proposal, wanted to take it further. He said:
 The Government have accepted that argument—I am with them; I do not quarrel with them about it ".—[Official Report, 22 January 1974; Vol. 867, c. 1602.]
He went on to move a new clause which would have taken the exemption further.
Perhaps the Under-Secretary will say whether his Minister of State is with him about clause 10 or whether he has had a remarkable change of heart. Perhaps he will be on the Committee, and perhaps we could hear what evidence the Department has which has not been revealed to us which has made him change his mind.
We welcome clause 18, and I welcome the campaign to encourage the take-up of rent rebates in the private rented sector. This would be valuable, particularly in areas such as the one that I represent, where there are large numbers of tenants in the private rented sector,


many of whom, for a variety of reasons, fail to take advantage of the rebate scheme. The Under-Secretary referred to it as a tax allowance. If it is a tax allowance, why does the cost of giving it fall upon the local authorities? Why does any part of the cost of administering it fall upon local authorities instead of being borne by the central Government, as with any tax allowance given in response to the circumstances of an individual taxpayer? That seems to be self-evident.
Clause 22, which appears to be helpful to local authorities, is directly contrary to an undertaking given to me by the Under-Secretary in last year's debate. He said that this was a non-contentious, technical clause which had the full support of the local authority assocations. I fear that in Committee he may find that it is not non-contentious and that it does not command as much support as he suggests.
I hope that the Under-Secretary of State will recall that he gave me an unqualified assurance about the Rating (Disabled Persons) Bill. He said:
 On the general issue, however, I give the House again the absolute assurance that the Bill does not involve a significant Exchequer contribution and, further, that local authorities such as Hove, about which the hon. Gentleman is concerned, have no reason to fear that there will be an increased burden on other ratepayers as a consequence of the relief in so far as it is mandatory."—[Official Report, 12 May 1978; Vol. 949, c. 1640.]
That was an unqualified assurance that mandatory rate relief which has to be given by local authorities to premises being used by disabled persons would not be an additional burden upon local authorities.
We had a long debate on that matter on Report. The argument was—and it must be accepted—that most of the areas that have concentrations of premises which qualify for the rate relief also have concentrations of ratepayers who are least able to bear the additional burden. Therefore, it is illogical to require them to carry an extra burden because Parliament has decreed that certain premises qualify for mandatory rate relief.
Why do the Government have to change their mind? The Under-Secretary of State has used the Layfield report as a justification for many items in the Bill.

The report was unequivocal. On page 168 it stated:
 In respect of mandatory relief over which local authorities have no influence, we consider that local authorities should be compensated through the grant arrangements.
But they are not so compensated. Local authorities—such as Cambridge—which have a substantial volume of mandatory rate relief do not receive any resources element and, therefore, receive no relief. The situation is unsatisfactory. It highlights the unsatisfactory nature of the resources element of the rate support grant. This is stated each time that we debate the matter in the House. The Government have still done nothing about it.
A resources element which is based on the deficit from the rateable resources per head, times the rate poundage, is a formula which encourages extravagance. The more a local authority spends, the more resources grant it receives. That is unsatisfactory. It is one of the reasons why this is an unhappy timing for the Second Reading of a Bill which deals with rates. It comes just before most ratepayers will have a nasty shock. Hon. Members will receive many letters about this.
We recognise that the Bill does some good in other ways, but it raises some problems in so far as it diminishes the rights of ratepayers and places some of the burden of providing statutory rate relief on local authorities rather than on the central Government. The Bill deserves a Second Reading, but a lot of work must be done on it in Committee. I hope we shall be able to improve it there, and also that we shall now get some answers to the many questions that we have raised in this debate.

12.30 a.m.

The Under-Secretary of State for the Environment (Mr. Kenneth Marks): This has been an interesting and useful debate. I am sure that if I attempted to answer now all the questions that have been put to me I should be here until after 10.30 tomorrow morning, and the hon. Member for Barkston Ash (Mr. Alison) and I are needed then for a debate in the Standing Committee on the Countryside Bill. I was thinking of that when the hon. Member for Isle of Wight (Mr. Ross) said that


he had a china shop. Tomorrow morning we shall be debating in Standing Committee the question of bulls on footpaths, among many other things.
The debate has ranged widely over the issue of rating and local government finance. Perhaps sometimes it has been concerned less with the subject matter of the Bill than with its context. But we acknowledge that such debates will be somewhat peripheral. However, the debate has been important in giving hon. Members the opportunity to air their concern, and giving parliamentary time to review some of the fundamental principles of local government finance, even though it has taken place at a late hour.
My hon. Friend said that the Bill was a key part of the Government's response to the work of the Layfield committee. The hon. Member for Isle of Wight thought that we should have gone beyond Lay-field and gone for local income tax. I was one of those Members who suggested just that to the Layfield committee, but it did not accept the case and gave many arguments as to why it could not be done.
My hon. Friend also said that some of the provisions arose from discussions in the consultative council on local government finance. The Bill is presented to the House in the belief that it will help to make rating more intelligible and fairer, and after this debate I think that many of us agree that it will do just that, although no doubt it will be debated at great length in Committee.
Rates are an unpopular tax. The hon. Member for Macclesfield (Mr. Winter-bottom) quoted the saying that taxes are paid in sorrow and rates in anger. Let us ask ourselves why. Is it the amount of rates? Or is it that on our doormats in early April there arrives the total figure of what we shall have to pay for all local government services during the next 12 months? Sometimes I wonder whether, if everybody got a bill at the beginning of the year saying how much tax he would have to pay on the cigarettes he smoked or the alcohol he consumed during the year, or what we were all to pay towards defence, some of those taxes would not be even more unpopular than they are now.
The hon. Member for Barkston Ash did not take the opportunity to talk about whether domestic rates should be

abolished or fundamentally changed. We had a glimpse of the Conservative Party wriggling on the hook that its leader made for it at the last general election. It was not in the manifesto; it was not one of those things that go into pamphlets issued long before. It was something that the right hon. Lady said in the heat of the campaign. It was designed to switch votes to the Conservative Party, and I wonder how many other similar promises will be made during the few days before polling day next time.
The Government's position is straightforward. Our policy is based on an acceptance by Layfield of rates as a workable tax well suited to local needs, and our approach is to build on what we have, as the Bill does. It is worth repeating that income taxpayers and other contributors to national taxes already meet about two-thirds of local government revenues through the rate support grant and that rate rebates are available to about 4 million domestic ratepayers, in addition to the domestic rate relief that is automatically given. Instalment arrangements can ease the problems of payment, and the Bill provides opportunities to expand the facilities for instalment paying beyond the domestic rate. As the hon. Member for Hove (Mr. Sainsbury) said, some of the firms in which he is interested may well benefit.
Those are sensible ways of relieving the burden of rates, and the Bill extends all three of them. Therefore, because of the Opposition's failure to propose the abolition of domestic rates, which their leader once promised us, I look forward to the amendments which they will put forward in Committee.
The hon. Member for Barkston Ash asked what had happened about various matters discussed in the Green Paper. As regards capital valuation for rating, the Government remain committed to this change for domestic property, but, as the hon. Gentleman surmised, there is no majority for it and, as a Government working in a minority position, we have to accept that the official Opposition and the Liberal Party, as the hon. Member for Isle of Wight said, would not support us. We should not get support for that in a Bill, and there is not much point in bringing in a Bill if one does not think one can get it through. I may say that


there would have been a water Bill making some fairly radical changes from the 1973 Act which is now so frowned on by the Opposition if we had had some incentive to that end from some of the minority parties.

Mr. Stephen Ross: I understood the hon. Gentleman to say that Layfield did not recommend a local income tax. That is not quite correct. I accept that Lay-field did not recommend a local income tax as the sole source of revenue, but it certainly recomended it as one source of revenue. I refer the hon. Gentleman to the Layfield report.

Mr. Marks: I stand corrected. Layfield reported to that effect, but it pointed to the considerable expense of collecting what would have been a minor part of the present rate revenue if that suggestion had been adopted.
The hon. Member for Barkston Ash spoke about value for money. My right hon. Friend the Secretary of State said that he would be setting up a new advisory committee on local government audit to receive reports from the chief inspector of audit and to set up value for money studies. I feel that we should say frankly to the country that what local government spends is an extremely important part of spending. We are too often afraid to admit that what the community spends through local government is a vital part of our whole life.
I turn next to central controls. Clause 26 and schedule 1 will relax some of the controls in a useful way. Some of them have already gone in earlier legislation, but the Government are very ready to consider going further, and, as my right hon. Friend the Secretary of State said last week, we shall be co-operating with the local authority associations in further studies to identify whether there is scope for relaxing some of the controls listed in the report recently published by the combined associations.
Perhaps I have said enough to show that all the Green Paper proposals are alive and well and that the hon. Gentleman should look beyond the Bill to see how they are being advanced.
I come now to the question of rate rises, though, to be fair, it was not referred to much by the Opposition except in the opening part of the debate. This

year's rises, of course, have no direct bearing on the Bill, though the issue is topical. It is important to look at the movement of rate levels in a broad context and not be misled by some of the alarmist newspaper reporting that we had a couple of weeks ago. It is clear that in this year, as in all years, there will be a wide variation in rates, from large increases to rate freezes or cuts in some cases. But the long-term relationship between rate payments and disposable domestic incomes, as my hon. Friend said, has remained remarkably stable over many years, and total local authority expenditure has been stabilised in real terms for the same time.
There was some alarm because some of the county authorities gave notice of big increases in their precepts at a time when some of the needs element of the rate support grant was being transferred to the district councils. Before going on about the fact that we shall not get rate increases below 10 per cent. this year, the Opposition should have thought of that before they defeated us in the debate on private income and wages. If they seriously thought that local government employees would stand by and see a free-for-all in private industry, encouraged by the Opposition, they were quite wrong. The Opposition's action is probably one of the causes, if not the main cause, of the escalation of rate increases to more than 10 per cent. this year.

Mr. Nicholas Winterton: The Minister cannot get away with that.

Mr. Sainsbury: The Minister, like other hon. Members, referred to the fact that rates as a proportion of disposable income have remained remarkably constant. Will he admit that this year at least there can be no doubt that rates will form an additional burden because they are going up very much faster than disposable income?

Mr. Marks: We do not know how disposable income will increase this year. Had the Opposition had their way, it would have been much more than the 9 per cent. which is going to local government employees.
Several hon. Members talked about the restriction on the rights of appeal. I understand their concern. As a ratepayer who once appealed, I can appreciate it. It is important that a Second Reading


debate should raise questions of principle, as has happened tonight. I hope that the clauses will be looked at very carefully in detail in Committee, but there are a few important points to remember at this stage. First, what is the justification for this restriction? It is not for a frivolous reason. The intention is to reduce the work load of appeals on professional staff of the valuation office so that the work of conducting a general revaluation can proceed.
Secondly, the restriction is only partial. For a year after each general revaluation there will be an unrestricted right, followed by a right after that, to challenge the assessment if there has been a change in the circumstances of the property. There are other safeguards.
The Department has received many leters from constituents of hon. Members on both sides of the House complaining about the present system—complaining that the man who had his central heating installed in 1973 had his rates put up whereas the man who had it installed in 1974 had not. This will at least achieve some reasonable agreement between neighbours.
My hon. Friend the Member for Stockport, North (Mr. Bennett) referred to a time limit on appeals. Although the ratepayer will not be able to make an appeal after the first year, the valuation officer will still be able to make a proposal, and will expect to make proposals to deal with any mistakes which come to light as a result of appeals. He will also expect to make proposals to deal with the chain reaction, so as not to allow unfair advantage over their neighbours to those who successfully appeal. In my view, the valuation officer will have a duty to examine such matters.
I remind the House that in paragraph 88 of its report the Layfield committee said:
 We consider that it would be justifiable to limit the ratepayer's right to make a proposal beyond the first year following revaluation to cases where there had been a material change in circumstancs affecting value, or a change of occupier. This procedure, which obtains in Scotland, should discourage appeals stimulated by rate poundage increases "—
which is why many appeals are lodged, not on the basis of the valuation being wrong but because the rates have gone up—

 without depriving anyone of a legitimate opportunity to test the validity of his assessment ".
The Government have accepted the recommendation of the Layfield committee and clauses 7 and 8 seek to implement that recommendation.
My hon. Friend the Member for Rotherham (Mr. Crowther) made the type of speech that I often made as a Back Bencher about the need for radical change. He asked why households with more than one adult wage cannot be assessed to more rates than households which have just one wage. This is a difficult question which is posed weekly to all hon. Members. The Layfield committee discovered that there are some good counter arguments. The main objection is the extreme difficulty of devising a system which could be workable, other than by going over to local income tax, and which would not be open to widespread evasion. Another objection is the fact that wage earners contribute substantially to local government through the rate support grant, 60 per cent. of which represents taxation.
It is a fact that in many cases those in multi-occupation of a house enjoy a lower standard than someone occupying a house on his own. Only at the weekend a pensioner complained to me that just down the road there were three pensioners sharing a house whilst he lived in a house on his own and had to bear the full burden of the rates. He is at liberty to invite two other pensioners to join him.
The hon. Member for Daventry (Mr. Jones) welcomed many features of the Bill, though he did not make enough of the considerable value of the Bill to small businesses. There is the extension of domestic relief to those who literally live over the shop. I do not have the figures, but I should not think that there are many cases where the proportion of the premises used for domestic purposes is less than one-eighth of the total hereditaments. Virtually all those in that position will enjoy this benefit. I hope that this will be of considerable value to shops in rural areas. I hope that village shops, which have been closing down at a rather rapid rate, will gain some benefit from this provision.
The provision for non-domestic ratepayers to pay by instalments will be of


considerable advantage to small businesses.
On the question of home improvements, concern has been expressed about the repeal of section 21 of the Local Government Act 1974, which prohibited between general revaluations any change in the rateable value of a house arising from the installation of central heating or from minor improvements. Some ratepayers will lose a concession which might have brought them a temporary gain. However, this provision will not take effect until after the next revaluation, when all hereditaments will have been revalued, anyway. It will apply only to new installations after that.
Many ratepayers have felt a keen sense of grievance at the fact that they have had to pay increased rates following the installation of central heating, while the man next door was getting away with it. If there is to be a tax, which is what rates are, based on the value of property, whether it is the rentable value or the capital value, an improvement of that kind creates an increase in value—whether rentable or capital. An extension on the kitchen or the installation of central heating increases the value of the property.
I suppose one advantage of capital value would be that people would recognise that their rateable value reflected the value of their house if they sold it. It would be a useful guide to the price people would expect to get for their house.

Mr. Arthur Jones: Why have the Government changed their mind?

Mr. Marks: To be frank, I cannot say. I shall look into that. Changes of mind are useful. Much information has been received bearing on the Layfield report, and no doubt that will come to light.
The hon. Member for Isle of Wight said that the majority of local authorities have hardly any balances. It will be interesting to witness the balances that appear at the end of the year. It is my impression that many local authorities expected that during the current financial year inflation would be running at a much higher level.
The hon. Gentleman referred to emergency and disaster funds. The Con-

servative Government gave local authorities powers to spend money it there were an emergency or disaster in their areas, but it has been left to the Government to allocate a figure and to say that when there is an emergency the Government will make a substantial contribution. The Government have been paying already. The Bill gives legislative powers to the payment that we have been making. It will be 75 per cent. on everything over a penny rate. We suggest that if spending reaches more than five times a penny rate there shall be an additional grant.
The grant to parish councils was referred to by the hon. Member for Macclesfield. The Government's view remains that the present powers of local authorities to pass on the benefit of the resources element are adequate. Local circumstances may vary greatly. It would be wrong for central Government to try to impose a central view, as apparently some Opposition Members wish, on the diverse circumstances of parishes. Many of the parishes are in better-off areas of the districts, and perhaps district councils would like to take into consideration some of their poor authorities.

Mr. A. J. Beith: How can the hon. Gentleman possibly defend an arrangement under which expenditure earned by the decision of ratepayers in a parish to pay an additional rate should incur grant-aid on a general basis to the district council that does not need to be passed on to the parish? Does he recognise that a few district councils—fortunately, only a few—are actively opposed to the concept of parish councils and would much prefer parish councils to entrust all their functions to them and enable them, the district councils, to control all the grant-aid and for the parish councils to disappear? Will he recognise that the parish council is in a weak position in the argument and that it should receive more support from the Government than the hon. Gentleman implies?

Mr. Marks: I am sure that the hon. Gentleman wants us to dictate more to district councils about what they should and should not do. I shall consider his argument. He says that the district councils receive more resources grant because local councils are spending money. Resources grant is based on the penny rate


rather than on what is spent by local councils.

Mr. Beith: In many districts a parish may decide, for example, to raise, a 3p rate at the expense of the inhabitants of that parish alone, and that incurs 3p worth of rate support grant for the district council. Within the same district there may be another area—perhaps an old borough that was taken into the district—in which no additional rate is imposed. That area will have its cemeteries, public halls and public conveniences financed from the very revenue that has been created by the inhabitants of the village that decided to go for the full 3p rate.

Mr. Marks: I shall examine the hon. Gentleman's argument. My hon. Friend the Under-Secretary of State, who will be taking the Bill through Committee, has agreed to examine his argument.
My hon. Friend the Member for Stoke-on-Trent, Central (Mr. Cant) referred to derelict land. Under this Government there has been a considerable increase in the reclamation of areas, including land in his constituency, for the purpose of the industrial grant.
Some years ago, under Mr. Crosland, the then Secretary of State for Local Government and Regional Planning, the whole Civic Trust programme was launched in Stoke. Since then there has been considerable support by the Government to the tune of about £18 million a year. I shall examine the argument that, having cleared the land for industrial purposes, those involved will need help, presumably from the Department of Industry, to set the scheme on its feet. Stoke has had substantial help from my Department. I have visited and opened some of the sites.
The problem of the rural areas needs to be examined carefully. I do not know whether the answer is merely to give more rate support grant to the shire counties. What is needed is an examination, as we have carried out in the inner cities, in partnership with the county councils, to see what is needed, where the deprivation is and where the needs are. We shall then perhaps consider some specific grants such as those given to our inner cities. I am considering the possibilities rather than making any statement of Government policy.
When I was chairman of the local finance committee some years ago, the ratepayers' and residents' associations were concerned only with keeping the rates down. Nowadays I do not get that. I hear from them about the services that are being provided and whether they are good enough. There is a demand for better services, whether roads, education or housing, or the many environmental aspects of life. A great many more people are now concerned with the proper spending of the rates and the proper raising of the right amount. I am sure that there is an improvement generally in what is being done.
This Bill concentrates on information about rates, payment by instalments, rebates and the other factors. It will be a considerable help in making rates a less unpopular tax. The Government can say that this is a measure to make improvements in the system of rating and local government finance. In the long term, improvements of this kind will do most to give local government a secure and acceptable means of raising revenue. My hon. Friends and I will look carefully at the reservations which have been expressed about the Bill. I hope that the House will recognise that there are some strong attractions in the Bill, especially for the poorer ratepayers, small businesses, and those who have separated and have financial problems as a result.
I ask the House to agree that the Bill should be read a Second time.

Question put and agreed to.

Bill accordingly read a Second time.

Bill committed to a Standing Committee pursuant to Standing Order No. 40  (Committal of Bills).

LOCAL GOVERNMENT FINANCE [MONEY]

Queen's Recommendation having been signified—

Resolved,

That for the purposes of any Act of the present Session to make provision in respect of rates and in respect of grants to local authorities or to bodies providing services for local authorities, and to amend certain enactments relating to fees charged by local authorities, it is expedient to authorise the payment out of money provided by Parliament of



(1) any sums required for the payment of grants—

(a) to local authorities in respect of rebates under the Rating (Disabled Persons) Act 1978;
(b) to local authorities in respect of expenditure under section 138(1) of the Local Government Act 1972 or under section 84(1) of the Local Government (Scotland) Act 1973;
(c) to the Local Authorities Management Services and Computer Committee or to other organisations having similar functions;

(2) any increase attributable to the said Act of the present Session in the sums pay able out of money so provided under the Local Government Act 1974.—[Mr. Tinn.]

RETIREMENT PENSIONS

Motion made, and Question proposed, That this House do now adjourn.—[Mr. Tinn.]

Mr. Deputy Speaker (Mr. Bryant Codman Irvine): Before I call the hon. Member for Birmingham, Perry Barr (Mr. Rooker), may I say that I understand that both he and the Minister have consented to certain brief interventions during the debate.

12.58 a.m.

Mr. J. W. Rooker: In this brief Adjournment debate I wish to raise the subject of the uprating of retirement pensions, and especially the uprating that took place last November. I want to call upon my hon. Friend the Minister to consider paying a bonus of an extra week's pension for Britain's 8 million pensioners. I believe that this is urgently required to make up for what I consider to be a sleight of hand or conjuring trick which occurred last November. At that time pensioners received 1·8 per cent. less than the law required that they should receive. When we consider that one week's pension is worth 2 per cent. of the total pension, it may be seen that the 1·8 per cent. that we are talking about is a substantial sum.
Section 125 of the Social Security Act 1975 provides in respect of the pensions uprating that
 the Secretary of State shall estimate the general level of earnings and prices in such manner as he thinks fit and shall have regard either to earnings or prices according to which he considers more advantageous.

That seems to be quite clear and is fully understood by all those inside and outside the House. This promise, which exists in law, is something to which the Tories have never agreed, and it was a real advance at that time in Parliament's treatment of our pensioners or senior citizens.
I do not think that Parliament should allow the pensioners to be double-crossed in the way they have been over the latest pensions uprating. The fact that pensions have been increased in real terms, well above the cost of living measured by the retail price index, is not in dispute. I hope that my hon. Friend will not spend the time that he has in the debate in arguing that case, because it is not relevant, because it is not what Parliament promised the pensioners. They were promised an increase in line with prices or earnings, whichever was the most advantageous.
In the year from November 1977 to November 1978, prices increased by 8·4 per cent. earnings increased by 13·2 per cent., and the pension uprating was only 11·4 per cent. This shortfall against earnings amounts to £16·12 for a single person, or 31p a week. It amounts to £25 a year, or 50p a week, for a couple. On those figures it can be clearly seen that the pensioners' own money was hi-jacked by the Government to pay their Christmas bonuses at Christmas 1978.
I do not wish to cast around to allocate the blame for the problem. It is difficult and real. One of the causes is that the pension announcement has to be made about 20 weeks in advance of the date of the payment. November is the date of payment, but the earnings figures from November to November are not known until the following January. When an announcement is made in May 1978, as it was in this case, we cannot challenge the figures until mid-January 1979. It is for that reason that it took so long before I and my hon. Friends were able effectively to challenge the Government on what we always thought would be an undervalue in the uprating. That is why I and my hon. Friends the Members for Chorley (Mr. Rodgers), for Coventry, South-West (Mrs. Wise) and for Sowerby (Mr. Madden) wish to tackle the Government on this issue tonight.
When my right hon. Friend the Minister for Social Security was questioned on the uprating he said:
 The important factor is what the annual increase in earnings will be in November."—[Official Report, First Standing Committee on Statutory Instruments, &amp;c., 21 June 1978; c. 30.]
The fact remains that we know that it was 1·8 per cent. more than the increase that the pensioners received, and therefore if the matter is not put right it will be a breach of trust on the part of the Government with Parliament and the pensioners.
I realise that the 1977 uprating was slightly in excess of both prices and earnings. The figures that I have worked out show that, even when that is taken into account, there is still a substantial shortfall when we take into account the 1978 uprating. In his letter to me of 13 November 1978 my right hon. Friend said that
 no corrective action is taken if a forecast has been too generous.
The letter was also set out in a written answer to me of 17 January 1979, at col. 771 of the Official Report. When we look at the figures now, we find that that is a wholly inaccurate statement if we take together the November 1977 uprating and the 1978 uprating, because the Government have pulled back the excess of 1977, so that the pensioners are left with a real shortfall over the two years, even taken together. Therefore, it is not true.
I am not saying that someone said"Let us get it all back ", but the effect has been the same as though that decision had actually been taken. It is something that cannot be left undone. We have to take action about the matter. It is no good arguing that we shall have to put the matter right this coming November.
It is a tragedy and a sad fact that, even so far as the matter was a scandal, not one trade union leader has raised this issue publicly. It is left to Labour Members. When Jack Jones retired from the leadership of the Transport and General Workers' Union, the pensioners of this country lost the most effective champion that they had had in recent years. It is a sad fact that no one is big enough to put his boots on—not even any of the Ministers at the DHSS. At present, pensioners are paying for the fact that there is not a Jack Jones who will tackle

the Government for what is clearly a buccaneering attitude concerning the up-rating of November 1978.
The shortfall does not sound very much, but to a pensioner couple 50p a week is a very substantial sum. To put the matter right would cost only £165 million, which is less than the taxpayers had to use to bail out the Crown Agents. That is the scale of figures with which we are dealing.
To say, as the Government have said so far in answer to the questions tabled by my hon. Friends and myself, that the Government will take account of the shortfall at the next uprating is not good enough. To start with, the base is wrong, and the single pensioner will still have lost £16 for this year and the pensioner couple will still have lost £25, which they cannot get back. That will not be made up. The Government will not say "We shall raise the base from which we calculate the next uprating, and we shall also throw in for good measure the extra money that was lost for that year." I cannot see that happening.
Nevertheless, the matter must be put right. My hon. Friend the Under-Secretary and his colleagues in Government will not be able to get away with leaving the matter as it is, because my hon. Friends and I will keep coming back to it. It is right that Labour Members should do this. The Labour Government put this promise into law. It will be a charade if we do not cary it out.
It is no good saying that the courts have looked at the matter. They have not looked at the issue I am raising tonight. They looked at the issue only when the Government changed the base of the calculation. That was a different matter in 1976. On this question there is now a substantial shortfall in the guesstimate of the prices and earnings figures, and 1·8 per cent. is so substantial an amount that it is almost a week's pension over the year.
I hope that the Under-Secretary will make a positive statement tonight that will give hope to Britain's 8 million pensioners and let them know that they have not been forgotten, that this issue has not been overlooked and that there are some hon. Members who are aware of the matter and are watching the small print and working on their behalf. I hope that tonight my hon. Friend will be able


to give some assurance to millions of pensioners.

1.8 a.m.

Mr. George Rodgers: I thank my hon. Friend the Member for Birmingham. Perry Barr (Mr. Rooker) for being very generous in allowing time for other hon. Members to intervene in the debate. He has put the case very lucidly and constructively.
I should like also to pay tribute to the Government, who have increased pensions in real terms. We are aware that that is a considerable achievement.
I think that we appreciate the difficulty in having to anticipate what will be the rise in prices and wages over a sustained period. None the less, many of us are seriously disturbed by the fact that a firm pledge, about which we have frequently publicly and proudly boasted, is apparently not to be honoured. The pledge was to increase pensions in line with rises in prices or wages, whichever was most beneficial to pensioners.
I am rather wary about the strangely worded replies to parliamentary questions that have been given by the Minister for Social Security. He has suggested that the current shortfall would be taken into account together with the general fiscal and monetary prospects. That strikes me as a commitment that contains considerable escape clauses. It is not a fair commitment at all. I hope that that matter will be clarified.
I recognise that if the main Opposition party ever achieved power, a Conservative Minister would not be subjected to an inquisition of this nature. I think that it is healthy and democratic that the challenge now should come from the Government side of the House. The sum involved is indeed trivial. When compared with the revenue lost in tax evasion, which is estimated at some £1,000 million per annum, it is insignificant. It is small in comparison with the bounty that this benevolent Government hand over to private industry during the course of a year, but it is vital and tremendously important to our pensioners.
The solution that has been proposed is simple and straightforward. We suggest that an Easter bonus should be paid to

pensioners to recompense them for this deficit in what they were entitled to expect. A case has been put honestly, fairly and well. I look for an equally helpful and constructive reply from the Minister.

1.10 a.m.

Mrs. Audrey Wise: It is a great pity that the Government have to engage in what my hon. Friend the Member for Birmingham, Perry Barr (Mr. Rooker) called guesstimates. This difficulty is of their own choosing.
In April 1976, when the changed basis of calculation was announced, it was clear that the change was brought into being because it was advantageous to the Government at that stage and saved £500 million compared with what would have been required for that pension uprating to keep in line with the historic costs of inflation. The escape by the Government on that occasion has left a legacy of continual misunderstanding and difficulty, which I greatly regret. It is unfortunate that the Government who brought in such a great advance in the method of calculating upratings, acknowledging that pensioners either had to be kept in line with inflation or had to receive the same sort of benefit of increased earnings received by the average worker, have been partially undermining their own policy because of the change to forward forecasting.
It has been partially undermined because people are left with an uneasy feeling that they do not understand what is happening. My hon. Friend the Member for Perry Barr has made it clear that this is bound to be the case because one cannot know whether the estimate has been correct until long after the announcement and until three months following the up-rating itself. If this matter is not corrected on this occasion, this precedent will serve as a positive incentive to Governments in future to ensure that any error in their estimate is on the side of underestimating rather than overestimating. It is bad and dangerous to work like that. I appeal to my hon. Friend the Under-Secretary to make clear that the Government accept that it is not fair and not possible to continue on this basis without correcting this error.
We acknowledge that the Tories are not committed to this concept. We acknowledge also that the increase which the pensioners have received is a real one. That very fact makes it even more imperative that no feeling should be left among pensioners that they have not received as fair treatment as they expected. It is not sensible for the Government to undermine their own policy in this way. I urge my hon. Friend to ensure that the matter is corrected.

1.15 a.m.

Mr. Max Madden: I join in the congratulations to my hon. Friend the Member for Birmingham, Perry Barr (Mr. Rooker) on initiating this debate and thank him for allowing me an opportunity of pressing the Government to think again about this matter.
Everybody recognises that the pension increase last November was nearly 2 per cent. less than it should have been on the basis on which we all understood it was being reckoned, namely, that it would keep pace with prices or earnings, whichever was the greater, on a November-to-November basis. The present gap between what pensioners are getting and what they should be getting is 31p a week for single people and 50p a week for a married couple.
The reasons have been outlined by my hon. Friends, and the Government's difficulties are understood. We have paid tribute to the Government's fine record on retirement pensions, which have increased by 20 per cent. in real terms since 1974. The new basis for calculating pensions was a great advance. Sadly, the Tories have never supported it and are unlikely to support it in future. When we initiate such an advance, it is important for the Government to keep faith with it. I therefore strongly urge the Minister to provide an additional payment, a bonus to all pensioners, to bring them up to the full benefit that they should have had last year.
We have had a rigorous winter. Heating bills will be very large for pensioners and everybody else in the next few weeks. There has been a large increase in the television licence fee. The cost of living for pensioners has, sadly, increased significantly over the last year and an additional payment is needed as early as possible. If the Government do

not give all pensioners more as soon as possible, it will be a major blemish on an otherwise fine record.
I hope the minister will say that the Government intend quickly and honourably not only to protect their own fine record but to do justice to the machinery that we introduced in the belief that it would protect pensioners' interests.

1.18 a.m.

The Under-secretary of State for Health and Social Security (Mr. Eric Deakins): I know that my hon. Friend the Member for Birmingham, Perry Barr (Mr. Rooker) and my other hon. Friends who have spoken are familiar with some of the background to the provisions for uprating social security benefits, but it may be as well if I outline them briefly so that we have them on the record.
The Social Security Act 1975 requires the Secretary of State to review the level of benefits each year to see whether they have retained their value. For this purpose pensions and long-term benefits have to be compared with the general level of earnings or prices, whichever is the more advantageous, and short-term benefits with prices. If benefits have not retained their value the Secretary of State must increase them
 at least to such extent as he thinks necessary to restore their value ".
As to the mechanics of the increase, we have established a pattern of annual uprating benefits each November. This is an appropriate time for the upratings to take place as it assures pensioners and other beneficiaries of their additional money before the onset of winter with its increased expenses. Hon. Members will appreciate that the task of increasing the benefits of millions of people is a massive one, involving a minimum period of five or six months, depending on the complexity of the uprating proposals. Of course, computers can do much of this for us but the main problem arises in relation to the 3 million or so supplementary beneficiaries whose benefit has to be recalculated individually by clerical staff. That work cannot begin until the new rates have been announced. There is no easy way out of this problem.
All this means that the new rates of benefit to be increased in November have to be determined and announced months beforehand. For this purpose a forecast


has to be made of the increase in earnings and prices which are likely to occur up to the date when the new benefit rates are to come into force.
This method of uprating on the basis of forecasts was challenged in the courts in 1977, but both the High Court and the Court of Appeal confirmed that the forecasting method of uprating was correct in law and that the Secretary of State should base each year's uprating on the best available forecast of what the movement of earnings or prices was likely to be over the relevant period.
That is the background against which we have to consider the uprating of benefits that took effect last November. The Secretary of State carried out his review in April 1978, and the forecast that he made about the likely rise in prices and average earnings between November 1977 and November 1978 was based on the most reliable estimates available at that time. Based on these estimates, short-term benefits went up by some 7·1 per cent. from November and pensions and other long-term benefits went up by some 11·4 per cent.
We now know that over the year from November 1977 to November 1978 prices rose by 8·1 per cent. That means that there was a shortfall of 1 per cent. in the uprating of short-term benefits. Over that period earnings rose by 13·3 per cent., so that there was a shortfall of 1·9 per cent. in the uprating of pensions and other long-term benefits.
The current pension rates of £19·50 for a single person and £31·20 for a married couple are still greater in purchasing power than those which took effect in November 1978. In fact, they represent the highest levels of pension ever in real terms. After allowing for price rises, their purchasing power in November 1978 was 3 per cent. higher than in November 1977, and about 20 per cent. higher than the rates introduced in October 1973, shortly before this Government took office.
Nevertheless, I accept that pensioners have received less than they would have received if the earnings forecast had been precisely correct. However, as the courts pointed out, forecasts, by their very nature, are unlikely to be accurate. The forecasts made at the time of the Secretary of State's review will therefore some-

times turn out to have been too high or too low when measured against the actual movement of the indices.
If the increase in benefits is higher than would have been justified by the actual increase in prices or earnings, the result is pure gain for the beneficiaries concerned. In the first place, they get a higher rate of benefit than if the estimate had been precisely correct. But then the new rate also provides a higher base as a starting point for calculating the new uprating. For example, in 1977 we put up pensions by 14·4 per cent., whereas the actual increase in prices between November 1976 and November 1977 was 13 per cent. Pensions therefore went up more than prices, and the new higher rate was the one that fell to be increased again in November 1978.
In answer to the point about comparison between 1977 and 1978, taking the two years together, between November 1976 and November 1978 pensions rose by 27·5 per cent. Over the same period prises rose by 22·1 per cent. and earnings by 23 per cent. Pensions therefore increased in purchasing power over that two-year period by 4·4 per cent. and went up more than earnings.
The courts considered the question of the accuracy of forecasts when they considered the forecasting method of uprating. They confirmed that the Secretary of State was not failing in his statutory duty if the forecasts he used proved in the event to be not entirely accurate. There is therefore no statutory requirement to make good the shortfall in last November's uprating.
However, as we have already made clear, the shortfall will be one of the factors that we shall take into account, along with the general economic prospects, when we are considering the amount of this year's uprating.
I cannot say more than that at this stage. As my hon. Friend the Member for Perry Bar will be aware, social security provisions, including the new rates of benefits to be introduced in November, are included in the general review of the economic situation carried out as part of the formulation of the Budget proposals. Until that review has been completed, my hon. Friend will understand that it is not possible to give any indication of the Government's proposals.
What I can say is that we fully appreciate the concern expressed by my hon. Friends in this debate—and I am sure that they are echoing a concern felt by the whole Labour movement—about the shortfall in last year's uprating. We shall take into account all that has been said in deciding our course of action, and I must ask my hon. Friends to await the announcement of the Government's proposals.
My hon. Friend the Member for Perry Barr has suggested that the pensioners' money was hi-jacked to pay for the Christmas bonus. If by that he means that the pension rates introduced last November were deliberately set low in order to provide resources for the payment of the bonus, I strongly refute it.

Mr. Rooker: I am not saying"deliberately." The Tory Party suggested a 53-week year in order to take the money off the pensioners to pay the bonus. I am not saying that it was deliberate, but that was the effect of what happened.

Mr. Deakins: That certainly was not our intention, and I am glad that my hon. Friend has acknowledged that. The forecasts of earnings and prices movements on which we based the new benefit rates were the best available to us, and benefits were uprated in line with those forecasts. The Christmas bonus was a separate operation, decided later in the year, for which resources had to be found separately.
These matters ought to be considered in the light of our record in relation to pensions and other social security benefits. Our record is second to none and one of which we can be justly proud. In spite

of the difficult economic situations that we have faced—perhaps the worst since the 1930s—we have increased the rates of pensions and other long-term benefits by much more than prices have increased, so that the rates introduced last November represented an increase in real value—after taking account of price rises—of some 20 per cent. over those introduced in October 1973 by the previous Administration.
We have also introduced a range of new benefits. These include non-contributory pensions, mobility allowance and invalid care allowance—all of which are related to disablement without a test as to means. By next month, the phasing in of the new child benefit scheme will be complete.
For the future, the new pension scheme, the first benefits of which begin to be paid next month, is designed to solve the problems of low incomes in retirement. It will ensure that every contributor to the scheme receives, either from the State or from an occupational scheme, an additional pension relating to his other past earnings, on top of the basic State pension. The levels of the new State pension will build up gradually over 20 years so that a married man on average earnings will retire on pensions for himself and his wife of more than half average earnings.
With this record, pensioners and other beneficiaries can be confident that we are fully aware of their problems and will have them in mind in determining our course of action.

Question put and agreed to.

Adjourned accordingly at twenty-six minutes past One o'clock.